IRAs: Traditional and Roth

The difference between a Roth IRA and a Traditional IRA can affect you now and in the future

If an Individual Retirement Account (IRA) is right for you, which one should you choose — a Roth IRA or a Traditional IRA? You would think the answer is simple. But this is about taxes and income.

In both a Roth IRA and Traditional IRA, the money you contribute has the potential to grow income tax-free. But there are several big differences between a Roth IRA and a Traditional IRA that may affect which one you decide to use.

Infographic of Traditional IRA vs Roth IRA comparison. Taking a tax break now vs Taking a tax break later.

*Qualified Roth Distribution are tax-free for federal income tax purposes if: the amounts are held in the Roth IRA for five years and the Roth IRA owner is at least 59½, has died or takes a distribution for the purchase of a first home.

Traditional IRA

  • You pay taxes when you take the money out. Depending on your income and other factors.
  • You must begin withdrawing money at ages indicated:
    • Age 73: for an individual who attains age 72 after December 31, 2022, and age 73 before January 1, 2033
    • Age 75: for an individual who attains age 74 after December 31, 2032 
    • If you turned 72 in 2022 or earlier, you must continue taking RMDs as scheduled.
    • If you're turning 72 in 2023 and have already scheduled your withdrawal, consider updating your withdrawal plan.
  • There are no income restrictions to participate.

Roth IRA

  • You put in money you have paid taxes on for that year. So the money you take out later has the potential be income tax-free.
  • You can make contributions at any age as long as you have earned income.
  • You never have to withdraw any money from your Roth. So you can even leave it to your heirs who can make tax-free withdrawals (but they may have to pay estate taxes).

Both plans have some things in common:

Infographic to encourage participants to think about their savings in long-term. What happens if you take money from your IRA.
  • You will have to pay a 10% early withdrawal penalty if you make withdrawals before age 59½ unless an IRS exception applies. You must hold your Roth IRA account for five years and the distribution must made after you reach age 59½, die or if the distribution is for the purchase of a first home or the earnings will be taxed in addition to the IRS penalty. A Traditional IRA requires you to pay income tax on withdrawn earnings and contributions.
  • You have until Tax Day of the next year to fund your account for the previous year.
  • In 2023, if you have earned income from W-2s or business income, you can put up to $6,500 ($7,500 if you’re age 50 or older) a year in all of your IRAs. If you participate in your employer’s retirement plan or you make contributions on behalf of your non-working spouse, a Traditional IRA may have income requirements that determine whether or not you can deduct contributions from your taxable income. See the specific requirements at

Which IRA you choose boils down to whether you want to pay taxes on the contribution you make today (Roth IRA) or wait until you retire and pay taxes on your withdrawal (Traditional IRA).

  • If you think you will be in a lower tax bracket when you retire, consider a Traditional IRA (if you are in a high income bracket now, you may have no choice but to select a Traditional IRA).
  • If you want to pay the income taxes on your contribution today, and let it have the potential to for tax-free qualified withdrawals later, pick a Roth.
  • For maximum tax-planning flexibility, you may want to think about investing in both.

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This information is provided by Voya for your education only. Neither Voya nor its representatives offer tax or legal advice. Please consult your tax or legal advisor before making a tax-related investment/insurance decision.

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