Roth IRA vs Traditional IRA: Which is Better for Your Family?

Choosing between a Roth IRA and Traditional IRA is one of the most important retirement planning decisions you’ll make. Both offer tax advantages, but they work differently.

Traditional IRA:

• Contributions may be tax-deductible now
• Taxes paid when you withdraw in retirement
• Required Minimum Distributions (RMDs) at age 73
• Best if: You expect lower tax rates in retirement

Roth IRA:

• Contributions made with after-tax dollars
• Qualified withdrawals are tax-free in retirement
• No RMDs during your lifetime
• Best if: You expect higher tax rates in retirement or want tax diversification

Contribution Limits (2025): Both have the same limits: $7,000 per year ($8,000 if age 50+)

Income Limits: Traditional IRA has no income limits for contributions (but deductibility phases out). Roth IRA has income limits with phase-out beginning at $146,000 for single filers and $230,000 for married filing jointly.

For Young Families: Roth IRAs often make more sense because you’re likely in lower tax brackets now, with decades of tax-free growth potential and more flexibility. No RMDs means better estate planning.

Consider a “backdoor Roth” if your income exceeds limits. Many families benefit from having both types for tax diversification.