Opening a Traditional IRA?

I skimmed through the posts and didn't see much mention of whether you'll be able to deduct your IRA contributions. That's the first thing you need to find out. You'll reference the section "2026 IRA deduction limits — You're covered by a retirement plan at work" on this page:

IRA contribution limits for 2026 | Fidelity

www.fidelity.com

And for reference, this is how IRS defines being covered by an employer plan:

Are you covered by an employers retirement plan? | Internal Revenue Service

Now I generally prefer Roth IRA contributions even if you qualify for tax-deductible IRA contributions, but most rules have exceptions. Roth IRA contributions help balance the pre-tax assets you're accumulating in your employer-sponsored plan. But the tax deduction is nice if you qualify for it, especially if it helps you avoid an unexpected tax bill - though with good planning those shouldn't happen often.

A few observations I have not seen mentioned - after I give Kudos to @BostonFI for an excellent answer on the income/tax basis for when to choose which IRA.

1st: regardless of Roth or Traditional, unless something changed I do not know about, the contribution limit is a total limit. Since it changes year-to-year I won't both with the real number, but if it was $1000 and you put $500 in a Roth, you can only contribute another $500 no matter where you put it. It is not $1000 per IRA!

2nd: For my own planning, and I have yet to hear anyone else describe it this way, in retirement I plan to use my Roth $$$ as an emergency fund. Since withdraws have no tax implications, it is a means to "boost" your spending in an unplanned way. Say I plan to stay below $XYZ in 2026, so I withdraw $XYZ(+taxes) from my Traditional IRA. Then, mid-year, I have significant roof damage that was not planned. Take that repair out of the Roth and no more tax planning is needed.

But as BostonFI said: Low income = Roth, High income = traditional. It does also depend on your planned "income" in retirement, but by the time it becomes a HUGE issue, you are likely Fat F.I.R.E.

For myself, I think about it differently than most people. So, I thought I would give that perspective.

I think you can use both retirement vehicles. The standard deduction for individuals is >$15k and for married it is >$30K. One can take at least that amount from a Traditional IRA/401K/403b tax free. Using a 5% withdrawal rate, it wouldn't hurt to have $300K for single or $600K married in Traditional. It could be a little less if you use an annuity rate of 6% or more if you use 4%. You might use an annuity rate for planning if you want to use the money up before you pass rather than leave it as an inheritance. The rest you can put in a Roth.

Keep in mind, the amount you put in the Roth is already taxed. That means it has cost you the taxes already. At a 15% real tax rate, the $85 you put in a Roth is $100 you could have put in a Traditional. The higher the tax rate the worse it is. Some might say that it is worse than that - that the money you are putting in the Roth is the money that is taxed at your highest rate because putting it in the Traditional would have lowered the income in your highest bracket.

Some folks worry about RMDs. Personally, I don't think it is something to worry much about unless you are significantly overfunded. Currently, the RMD rate starts at a little less than 4% and works up to more than 8.2% after age 90. It gets up to 50% at age 120.

I think Roth is a good tool for some folks - especially younger folks with low incomes. It wasn't available when I started working - 401Ks in general were not really available at all until 1981. They became widely available in 1983. When they did become available, most employees I knew didn't trust their employers or the government with their retirement money. Roth was invented in 1998 for IRAs and employers could use them for Roth 401Ks in 2006 - by that time, I wasn't among the younger workers anymore. Also, many of us had been convinced of the immediate tax benefits of the Traditional 401k and didn't participate in the Roth. The way some employers "sold" us on contributing to the 401k is that if we put 3 or 5% in, the lower taxes would make it so we didn't really see much of a reduction in our pay.

not putting as much into a Roth IRA was my biggest mistake in my savings. I listened to my tax advisor who always told his clients to not pay taxes today and pay the taxes later when you retire and your income will be less. Well, we saved a lot and thought we did the right thing with a traditional IRA but our income in retirement was NOT less If you really think that taxes will go down in the future then use traditional IRA. Wish I had paid my taxes years ago and would have saved $1M in taxes I will owe now on what I saved for retirement

One advantage of the Roth is being able to invest the value of the tax. However, you can add the value at a later date when converting from a traditional IRA. A consideration would be what the tax savings would be spent on instead. If saving for a house, it may be better to go traditional, although you can take up to 10k out for a house penalty free (pay attention to 5 year rule). Another consideration is that you can pull PRINCIPAL out of a Roth IRA tax and penalty free after one year (penalty is on income, 401ks have different rules). While I would discourage withdrawals, this could be an emergency fund if you want to max out contributions and are tight on cash. The rules can be tricky. When reading IRS regs, qualified plan means you got a tax deduction (traditional 401k/403b) non qualified plan means Roth or excess IRAcontribution, and IRA= IRA. You can also split contributions and do some of both. Another consideration for those who give to charity, RMD distributions (age 75+ if you are younger) could be used to pay the charity directly. You don't recognize the income on you taxes (up to 108k currently) but contribution counts toward RMD. So I think tithe payers should keep at least 10% in a traditional plan vs Roth.

The decision between Roth IRA and traditional IRA comes down to tax arbitrage—do you expect your income in the future when you'd be taking traditional IRA distributions to be higher or lower than your income now? If income is lower now > Roth IRA. If income is higher now > traditional IRA. The strategy is to pay the tax when you're paying less tax.

Another consideration is whether you expect your income to increase over your working years. If you're young and have your whole working life ahead of you, you are very likely to be currently earning the lowest income you'll ever earn. That points to using Roth IRA now to build up that account during your lower earning years. The Roth IRA is a very valuable account, both for you and for heirs. My feeling is if you're eligible to contribute, do so.

As Westie points out, if you plan to eventually use the backdoor Roth IRA conversion maneuver once your income exceeds eligibility to contribute to a Roth IRA, having zero traditional IRA balances greatly simplifies those conversions.

Lastly, yes, leave the Roth IRA balance alone even if you decide to use a traditional IRA going forward. You're allowed to distribute your contributions without tax consequences (not the earnings), but those dollars are more valuable to you staying invested inside that tax shelter.

In my opinion, unless you are making VERY little money, a Traditional account is more beneficial than a Roth. So I generally think it's a great idea.

The only thing I would caution you about is, if you anticipate your income rising to over $150,000/yr with your current employer, I would not contribute to a traditional IRA. The reason is that you will at that income be unable to take a tax deduction for a traditional IRA, you will be unable to contribute to a Roth IRA, and it would be very expensive to do a "backdoor" Roth IRA due to the pro rata rule.

I would read up on backdoor Roth IRAs and the pro rata rule generally because even though they're not a factor for you at your current income, if you do traditional IRA contributions now it will affect you later when your income does require backdoor Roth IRA contributions.

There are a few ways to mitigate the issue, but if you're not prepared it could cause you a large tax bill.