Roth vs. Traditional IRA: How to choose the right retirement account

Do you want to pay the IRS today, or do you want to pay them tomorrow?

I sit across from clients every week who just had their first child, or just landed a massive promotion, and suddenly realize they need to take retirement planning seriously. I remember how confusing it felt the first time I looked at the system. The financial industry throws around terms like "Traditional," "Roth," "Non-Deductible," and "Backdoor" until you give up.

Most of my older clients already know how this works. But if you are just starting to take this seriously, the entire system boils down to that single question.

• Standard (Traditional) IRA = Pre-Tax. You get a tax deduction today, but you pay taxes when you pull the money out in retirement.
• Roth IRA = Post-Tax. You pay taxes today, but the money grows tax-free forever, and you pay zero taxes when you pull it out.

The Standard IRA (Pre-Tax)

The Standard IRA gives you instant gratification. You contribute money, and the IRS lets you deduct that exact amount from your taxable income for the year.

This usually becomes an issue right after you get a major promotion. The IRS does not let high earners double-dip. If you have a retirement plan at work, your ability to take the IRA deduction phases out based on your income.

• For Single Filers (2026): Your deduction begins phasing out at $81,000 and disappears completely once you earn $91,000.
• For Married Filing Jointly (2026): Your deduction begins phasing out at $129,000 and disappears at $149,000.

The Non-Deductible Trap

Suppose you clear $150,000 this year and put $7,500 into a Standard IRA. Because your paycheck crossed the IRS limit, you get zero tax break today.

When you file your return, you must include Form 8606 to prove you already paid taxes on that $7,500.

If your CPA forgets that form, the IRS computers log your money as untaxed. Thirty years later, you pull that cash out to pay a medical bill and the IRS taxes it a second time. I despise double taxation. I review my clients' past returns specifically to find missing 8606 forms. A good CPA handles this complexity behind the scenes so you never have to worry about it.

The Roth IRA (Post-Tax)

I consider the Roth IRA the ultimate wealth-building tool because it permanently eliminates the IRS from your retirement equation.

You do not get a tax deduction when you fund a Roth IRA. You pay your taxes upfront. But in exchange, the money grows completely tax-free. When you turn 65 and pull out a million dollars, you owe absolutely nothing to the government.

Like the Standard IRA, the Roth has income limits. In 2026, Single filers phase out starting at $153,000, and Married couples phase out at $242,000. If you earn more than that, you cannot contribute directly to a Roth IRA.

Roth vs. Traditional: When to use which?

To make this decision, I always compare your tax bracket today against what we expect your tax bracket to be when you retire.

Let's look at a localized example. I work with high-earning tech professionals living in Santa Clarita, California. Because of their high salaries and California state taxes, they currently sit in the 32% federal tax bracket. When they retire, they plan to have zero earned income, dropping them down into the 12% bracket.

• The Smart Move: They should aggressively fund a Pre-Tax 401(k). (Because their income is so high, the IRS will not let them take a deduction for a Standard IRA if they already have a retirement plan at work). By taking the 401(k) deduction today, they avoid paying a 32% tax rate on that money. When they withdraw it in retirement, they only pay 12%. They legally save 20% in taxes.

Now, suppose you are a 24-year-old making an entry-level salary. You sit in the 12% tax bracket, but you plan to be a high-earner later in life.

• The Smart Move: You should aggressively fund a Roth (Post-Tax) IRA. You lock in your low 12% tax rate today. When you retire wealthy, you avoid the 32% tax bracket entirely because your withdrawals are tax-free.

Next Steps

Before you fund any retirement account this year, verify your Modified Adjusted Gross Income (MAGI) and determine whether a deduction actually benefits you. If your income sits too high, you may need to explore advanced strategies.

If you want a second opinion on your retirement strategy, or need help finding missing 8606 forms, give our office a call or book a meeting here.

Disclaimer: The information provided in this article is for educational purposes only and does not constitute investment, tax, or financial advice. Tax law is highly fact-specific and subject to change. Always consult with a licensed professional regarding your specific situation.