Start simple, with your age and income. Then compare the IRA rules and tax benefits. There are 2 types of IRAs, and choosing between a Roth IRA and a traditional IRA often depends on your current financial situation and your anticipated tax bracket in retirement. Roth IRAs offer tax-free growth and tax-free withdrawals in retirement, making them an attractive option for those who expect to be in a higher tax bracket in the future. Traditional IRAs provide tax-deferred growth with pre-tax contributions, which can be beneficial for those seeking a tax break in the current tax year.
Retirement
Roth IRA vs. traditional IRA: Eligibility, rules, and tax benefits
Compare Roth IRAs vs traditional IRAs to learn the key differences in income requirements, rules for contributions and withdrawals, and tax implications.
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Contribution limits
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IRA eligibility
Eligibility requirements for traditional and Roth IRAs differ primarily based on income levels and tax filing status. Traditional IRAs generally allow anyone with earned income to contribute, but tax deductibility is phased out at higher income levels if the contributor or their spouse has access to a workplace retirement plan. In contrast, Roth IRAs have income caps beyond which individuals cannot contribute at all. Determining eligibility is crucial before choosing which IRA to open because it ensures that contributors select the type that maximizes their tax advantages and aligns with their financial situation and retirement goals.
| ROTH IRA | TRADITIONAL IRA | |
Are there age limits for IRA contributions? |
You can contribute to a Roth IRA at any age. | As a result of the changes made by the SECURE Act, since 2020, you can make contributions to a traditional IRA regardless of your age. |
What are the income limits for IRA contributions? |
In 2025, single filers must make less than $150,000 to contribute to a Roth IRA and married couples filing jointly must make less than $236,000. | Anyone with earned income can contribute to a traditional IRA. |
How does my income affect how much I can contribute? |
The amount you can contribute to a Roth IRA:
|
The amount you can contribute to a traditional IRA:
There are no additional restrictions based on your income, however, income can impact whether or not you're able to deduct your contributions. |
Can minors own and contribute to an IRA? |
Yes, a minor with earned income can own and contribute to an IRA. The IRA is controlled by a parent or another adult, referred to as the custodian, until the minor reaches a certain age, typically 18 or 21. Income limits are based on the minor’s income, not the parent’s. Younger investors and those expected to be in a higher tax bracket in the future typically benefit more from a Roth IRA. |
Yes, a minor with earned income can own and contribute to an IRA. The IRA is controlled by a parent or another adult, referred to as the custodian, until the minor reaches a certain age, typically 18 or 21. Income limits are based on the minor’s income, not the parent’s. Younger investors and those expected to be in a higher tax bracket in the future typically benefit more from a Roth IRA. |
Can nonworking spouses contribute to an IRA? |
A spouse with low or no income may still be able to contribute to an IRA if that person is filing a joint tax return with a working spouse. The total amount contributed by both spouses can’t exceed their joint income, or the IRS limits. |
A spouse with low or no income may still be able to contribute to an IRA if that person is filing a joint tax return with a working spouse. The total amount contributed by both spouses can’t exceed their joint income, or the IRS limits. |
Are there age limits for IRA contributions?
ROTH IRA
You can contribute to a Roth IRA at any age.
TRADITIONAL IRA
As a result of the changes made by the SECURE Act, since 2020, you can make contributions to a traditional IRA regardless of your age.
What are the income limits for IRA contributions?
ROTH IRA
In 2025, single filers must make less than $150,000 to contribute to a Roth IRA and married couples filing jointly must make less than $236,000.
TRADITIONAL IRA
Anyone with earned income can contribute to a traditional IRA.
How does my income affect how much I can contribute?
ROTH IRA
The amount you can contribute to a Roth IRA:
- Can't exceed the amount of income you earned that year.
- Can't exceed the IRS-imposed limits (see below).
- Could be reduced—or even eliminated—based on your modified adjusted gross income (MAGI).
Get details on Roth IRA income limits
TRADITIONAL IRA
The amount you can contribute to a traditional IRA:
- Can't exceed the amount of income you earned that year.
- Can't exceed the IRS-imposed limits (see below).
There are no additional restrictions based on your income, however, income can impact whether or not you're able to deduct your contributions.
Can minors or nonworking spouses contribute to an IRA?
ROTH IRA
Yes, a minor with earned income can own and contribute to an IRA. The IRA is controlled by a parent or another adult, referred to as the custodian, until the minor reaches a certain age, typically 18 or 21. Income limits are based on the minor’s income, not the parent’s.
Younger investors and those expected to be in a higher tax bracket in the future typically benefit more from a Roth IRA.
TRADITIONAL IRA
Yes, a minor with earned income can own and contribute to an IRA. The IRA is controlled by a parent or another adult, referred to as the custodian, until the minor reaches a certain age, typically 18 or 21. Income limits are based on the minor’s income, not the parent’s.
Younger investors and those expected to be in a higher tax bracket in the future typically benefit more from a Roth IRA.
Can nonworking spouses contribute to an IRA?
ROTH IRA
A spouse with low or no income may still be able to contribute to an IRA if that person is filing a joint tax return with a working spouse. The total amount contributed by both spouses can’t exceed their joint income, or the IRS limits
TRADITIONAL IRA
A spouse with low or no income may still be able to contribute to an IRA if that person is filing a joint tax return with a working spouse. The total amount contributed by both spouses can’t exceed their joint income, or the IRS limits
IRA contribution rules
Both Roth IRAs and traditional IRAs have contribution limits set by the IRS and allow contributions from minors and nonworking spouses under specific income rules. However, Roth IRA contributions are affected by the contributor's income level, potentially reducing or eliminating contribution eligibility based on their MAGI, whereas traditional IRAs don't have income-based restrictions. Additionally, traditional IRA contributions may be tax-deductible, offering immediate tax benefits, whereas Roth IRA contributions are not deductible but provide tax-free growth and withdrawals in retirement.
| ROTH IRA | TRADITIONAL IRA | |
What are the contribution limits? |
For the 2025 tax year:
Limits could be lower based on your income. |
For the 2025 tax year:
|
Can I claim my contribution as a deduction on my tax return? |
No. Contributions are not deductible. |
Yes. You can generally claim your contributions as a tax deduction, reducing your taxable income for the year you make the contribution. Deductibility may be limited if you or your spouse are covered by a retirement plan at work and your income exceeds certain levels.
|
What's the deadline for making contributions in a given year? |
The Roth IRA contribution deadline is typically April 15 of the following year. | The deadline is typically April 15 of the following year. |
How much money do I need to open a Vanguard IRA®? |
You'll need $1,000 for any Vanguard Target Retirement Fund or for Vanguard STAR® Fund. Most other Vanguard funds require an initial investment of at least $3,000, though some have higher minimums. |
You'll need $1,000 for any Vanguard Target Retirement Fund or for Vanguard STAR Fund. Most other Vanguard funds require an initial investment of at least $3,000, though some have higher minimums. |
What are the contribution limits?
ROTH IRA
For the 2025 tax year:
- If you're under age 50, you can contribute up to $7,000.
- If you're age 50 or older, you can contribute up to $8,000.
Limits could be lower based on your income.
Get details on IRA contribution limits & deadlines
TRADITIONAL IRA
For the 2025 tax year:
- If you're under age 50, you can contribute up to $7,000.
- If you're age 50 or older, you can contribute up to $8,000.
Limits could be lower based on your income.
Can I claim my contribution as a deduction on my tax return?
ROTH IRA
No. Contributions are not deductible.
TRADITIONAL IRA
Yes. You can generally claim your contributions as a tax deduction, reducing your taxable income for the year you make the contribution.
Deductibility may be limited if you or your spouse are covered by a retirement plan at work and your income exceeds certain levels.
What's the deadline for making contributions in a given year?
ROTH IRA
The Roth IRA contribution deadline is typically April 15 of the following year.
TRADITIONAL IRA
The deadline is typically April 15 of the following year.
How much money do I need to open a Vanguard IRA®?
ROTH IRA
You'll need $1,000 for any Vanguard Target Retirement Fund or for Vanguard STAR® Fund.
Most other Vanguard funds require an initial investment of at least $3,000, though some have higher minimums.
TRADITIONAL IRA
You'll need $1,000 for any Vanguard Target Retirement Fund or for Vanguard STAR Fund.
Most other Vanguard funds require an initial investment of at least $3,000, though some have higher minimums.
IRA Tax Advantages
When comparing Roth versus traditional IRA tax advantages, Roth IRAs offer tax-free growth and withdrawals, making them appealing if you anticipate being in a higher tax bracket during retirement. In contrast, traditional IRAs provide up-front tax relief through tax-deductible contributions, with taxes deferred until funds are withdrawn in retirement. This makes traditional IRAs beneficial for those seeking immediate tax deductions. Each type offers distinct tax benefits tailored to different financial situations and retirement planning strategies.
| ROTH IRA | TRADITIONAL IRA | |
Are IRA contributions tax deductible? |
You can't deduct your Roth IRA contribution. |
You may be able to deduct some or all of your traditional IRA contributions. The deductible amount could be reduced or eliminated if you or your spouse is already covered by a retirement plan at work. |
Are IRA contributions tax deductible?
ROTH IRA
You can't deduct your Roth IRA contribution.
TRADITIONAL IRA
You may be able to deduct some or all of your traditional IRA contributions. The deductible amount could be reduced or eliminated if you or your spouse is already covered by a retirement plan at work.
IRA withdrawal rules
| ROTH IRA | TRADITIONAL IRA | |
Will I pay taxes on withdrawals? |
You'll never pay taxes on withdrawals of your Roth IRA contributions. And you won't pay taxes on withdrawals of your earnings as long as you take them after you've reached age 59½ and you've met the 5-year-holding-period requirement. |
You'll pay ordinary income tax on withdrawals of all traditional IRA earnings and on any contributions you originally deducted on your taxes. |
Is there a penalty for withdrawals taken before age 59½? |
There are no penalties on withdrawals of Roth IRA contributions. But there's a 10% federal penalty tax on withdrawals of earnings. |
With a traditional IRA, there's a 10% federal penalty tax on withdrawals of both contributions and earnings. |
Will I have to take required minimum distributions (RMDs)? |
Roth IRAs have no RMDs during your lifetime. | Due to changes to federal law that took effect on January 1, 2023, the age at which you must begin taking RMDs differs depending on when you were born. If you reached age 72 on or before December 31, 2022, you were already required to take your RMD and must continue satisfying that requirement. However, if you had not yet reached age 72 by December 31, 2022, you must take your first RMD from your traditional IRA by April 1 of the year after you reached age 73. For each subsequent year, you'll need to take your annual RMD by December 31. |
Will I pay taxes on withdrawals?
ROTH IRA
You'll never pay taxes on withdrawals of your Roth IRA contributions. And you won't pay taxes on withdrawals of your earnings as long as you take them after you've reached age 59½ and you've met the 5-year-holding-period requirement.
Get details on IRA withdrawals
TRADITIONAL IRA
You'll pay ordinary income tax on withdrawals of all traditional IRA earnings and on any contributions you originally deducted on your taxes.
Is there a penalty for withdrawals taken before age 59½?
ROTH IRA
There are no penalties on withdrawals of Roth IRA contributions. But there's a 10% federal penalty tax on withdrawals of earnings.
TRADITIONAL IRA
With a traditional IRA, there's a 10% federal penalty tax on withdrawals of both contributions and earnings.
Will I have to take required minimum distributions (RMDs)
ROTH IRA
Roth IRAs have no RMDs during your lifetime.
TRADITIONAL IRA
Due to changes to federal law that took effect on January 1, 2023, the age at which you must begin taking RMDs differs depending on when you were born. If you reached age 72 on or before December 31, 2022, you were already required to take your RMD and must continue satisfying that requirement. However, if you had not yet reached age 72 by December 31, 2022, you must take your first RMD from your traditional IRA by April 1 of the year after you reached age 73.
For each subsequent year, you'll need to take your annual RMD by December 31.
Is a Roth or traditional IRA better for you?
Deciding whether a Roth or traditional IRA is better for you depends on several factors:
- Current and expected future income levels: If you expect to be in a higher tax bracket in the future, a Roth IRA might be more beneficial as it offers tax-free withdrawals.
- Age and retirement timeline: Younger investors might prefer a Roth IRA to benefit from tax-free growth over a longer period.
- Tax-filing status and income: This determines eligibility for deductions (traditional IRA) or contributions (Roth IRA).
- Retirement goals and financial needs: Consider when you plan to access the funds and whether you'll need the money before retirement.
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For more information about Vanguard mutual funds, obtain a mutual fund prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing.
Investments in Target Retirement Funds are subject to the risks of their underlying funds. The year in the Fund name refers to the approximate year (the target date) when an investor in the Fund would retire and leave the work force. The Fund will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. The Income Fund has a fixed investment allocation and is designed for investors who are already retired. An investment in a Target Retirement Fund is not guaranteed at any time, including on or after the target date.
All investing is subject to risk, including the possible loss of the money you invest.
We recommend that you consult a tax or financial advisor about your individual situation.
When taking withdrawals from an IRA before age 59½, you may have to pay ordinary income tax plus a 10% federal penalty tax. Withdrawals from a Roth IRA are tax-free if you are over age 59½ and have held the account for at least five years; withdrawals taken prior to age 59½ or five years may be subject to ordinary income tax or a 10% federal penalty tax, or both. (A separate five-year period applies for each conversion and begins on the first day of the year in which the conversion contribution is made.)