What is the difference between a Roth IRA and a traditional IRA?

The main difference between a Roth IRA and a traditional IRA is how and when you get a tax break. Contributions to traditional IRAs are tax-deductible, but withdrawals in retirement are taxable as income. In comparison, contributions to Roth IRAs are not tax-deductible, but the withdrawals in retirement are tax-free.

Can you contribute to a traditional IRA and a Roth IRA?

Worth noting: You can contribute to a traditional and a Roth IRA during the same year, as long as the total amount does not exceed the maximum allowable contribution limit: $7,000 in 2024 ($8,000 if age 50 or older). » Our picks for the best Roth IRAs and best traditional IRAs

How much can you contribute to a Roth IRA?

The most you can contribute to all of your traditional and Roth IRAs is the smaller of: For 2021, $6,000, or $7,000 if you’re age 50 or older by the end of the year; or your taxable compensation for the year. For 2022, $6,000, or $7,000 if you’re age 50 or older by the end of the year; or your taxable compensation for the year.