Traditional IRA

A Traditional IRA is the pre-tax mirror image of a Roth IRA. Contributions can be deducted from current-year taxable income (subject to income limits if the contributor is covered by a workplace retirement plan), the investments grow tax-deferred, and distributions are taxed as ordinary income at the rate that applies in the year of withdrawal.

Contribution limits for 2026:

• $7,000 (under 50) or $8,000 (50+) combined across all traditional and Roth IRAs.
• Deductibility phase-out for covered workers: in 2026, single filers begin to lose the deduction at $79,000 AGI and fully lose it at $89,000; married filing jointly $126,000–$146,000.

The defining downside is the Required Minimum Distribution (RMD). From age 73 (rising to 75 by 2033 under SECURE 2.0), the IRS requires an annual withdrawal calculated from the December 31 balance and a life-expectancy table. Failing to take an RMD attracts a 25% excise tax (down from 50% pre-SECURE 2.0).

Roth conversions — moving money from a traditional IRA to a Roth IRA, paying income tax on the converted amount — are a common multi-year strategy for retirees with low-income years before Social Security or RMDs start. Each conversion is its own taxable event.

Use the IRA comparison calculator to compare traditional vs Roth at different ages and tax rates.