Roth vs Traditional IRA: The 2026 Tax Arbitrage Guide

If your income exceeds the Roth IRA limits, there's a workaround: the Backdoor Roth IRA. You contribute to a non-deductible Traditional IRA (no income limit for contributions, only for deductibility) and then immediately convert it to a Roth IRA. The conversion is tax-free as long as you don't have existing pre-tax IRA balances (due to the "pro-rata rule"). This strategy is legal, well-established, and widely used by high earners. Consult a tax professional to execute it correctly.

The Honest Answer for Most People in Their 30s

For most people under 40 who are not yet in the top two tax brackets, the Roth IRA is the better choice. The combination of tax-free growth over decades, tax-free retirement income, no required minimum distributions (RMDs), and contribution withdrawal flexibility makes it the most powerful retirement account available to most working Americans. When in doubt, Roth first.