Money & Career

Roth IRA vs Traditional IRA

Decide which IRA fits you, fund it correctly, and know exactly what the tax rules do to your money.

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What you will learn about Roth IRA vs Traditional IRA

The 7-day sprint
  1. An IRA Is a Container, Not an Investment. An IRA is a tax-advantaged wrapper you put investments inside, and both flavors require taxable compensation and share one annual contribution limit.
  2. The Only Real Difference Is Timing. Traditional gives you a tax deferral, not a permanent tax break, so the choice between traditional and Roth is a bet on your tax rate now versus your tax rate later.
  3. Roth Income Limits and the MAGI Trap. Your ability to contribute to a Roth phases out over a modified adjusted gross income range that depends on your filing status.
  4. Contribution Eligibility and Deduction Eligibility Are Two Different Tests. There is no income limit on contributing to a traditional IRA; income and workplace plan coverage only decide how much of that contribution you can deduct.
  5. Getting the Money Out. Before 59 and a half a 10% additional tax generally applies to the taxable part of an IRA distribution, and traditional IRAs force withdrawals starting at 73 while Roth IRAs never do during the owner's life.
  6. The Roth Five-Year Clocks and the Ordering Rules. A Roth withdrawal is tax-free only if it is qualified, which requires a five-year holding period plus a qualifying event, and money comes out in a fixed order that makes contributions reachable long before earnings are.
  7. Choosing, Funding, and Not Breaking Anything. Put your money in a sensible order, fund the right account by the deadline with the right tax year marked, invest it, and avoid the two classic errors of excess contributions and untracked basis.
The 80/20: the 6 concepts that matter most
  • Tax now or tax later, and nothing else
  • The IRA is a wrapper, not an investment
  • One shared limit, capped by what you earned
  • Eligibility to contribute and eligibility to deduct are different tests
  • Access before 59 and a half, and the Roth ordering rules
  • RMDs on one side, none on the other
The core idea, explained like you are 5

A traditional IRA and a Roth IRA hold the same investments and both shelter growth from annual taxation; the only fundamental difference is whether you pay income tax on the money going in or coming out.

Then the quiz and the ladder

10 questions that correct you when you are wrong, and beginner, intermediate, advanced levels, each with a practical exercise.

Created Sep 13, 2026. No mistakes have been reported by learners.

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