US Retirement - 2026 IRA Rules
Roth vs Traditional IRA Calculator
Roth or Traditional IRA? Enter your tax rates and see which one leaves you richer after tax - with 2026 IRS contribution limits and income phase-outs built in. Free, no sign-up.
1. Nominal APY vs. Real Post-Inflation Yield
A common pitfall in yield farming and staking is prioritizing high nominal APY percentages without factoring in baseline network token inflation. For instance, if a network offers 14% nominal staking rewards but dilutes circulating supply by 10% annually, your real purchasing power expansion is only ~3.6%.
2. Liquid Staking Derivatives (LSTs) & Capital Efficiency
Liquid staking protocols (such as Lido stETH, Rocket Pool rETH, and JitoSOL) allow institutional participants to maintain yield generation while retaining liquidity for DeFi lending and liquidity provision. However, LSTs introduce smart contract and depeg risk that must be modeled into portfolio variance.
Roth vs Traditional IRA: The One Rule That Decides It
Both accounts grow your money the same way. The only question is when you pay tax: Traditional gives you a deduction now and taxes withdrawals later; Roth takes after-tax dollars now and never taxes you again. The math reduces to one comparison — your tax rate today versus your tax rate in retirement.
The rule
- Same rate now and later: it is a tie. $7,500/year for 30 years at 7% with 22% tax both times gives about $553,000 after tax either way.
- Lower rate in retirement: Traditional wins — you deduct at 22% now and withdraw at, say, 15%.
- Higher rate in retirement: Roth wins — you lock in today's lower rate forever.
2026 limits and income caps
The 2026 IRA contribution limit is $7,500 ($8,600 at 50+), shared across Traditional and Roth. Direct Roth contributions phase out at $153,000-$168,000 (single) and $242,000-$252,000 (married filing jointly). Above that, the backdoor Roth — a nondeductible Traditional contribution converted to Roth — remains a legal workaround.
Two differences beyond the math
Roth IRAs have no required minimum distributions — Traditional owners must start withdrawals at 73. And Roth contributions (not earnings) can be withdrawn anytime tax- and penalty-free, which makes the Roth double as an emergency backstop.
Pair this with workplace savings using our 401(k) calculator — the standard order is: 401(k) to the full employer match, then max the IRA, then back to the 401(k).
Roth vs Traditional IRA: Frequently Asked Questions
Is Roth or Traditional IRA better?
It depends on tax rates: if your retirement tax rate will be lower than today's, Traditional usually wins; if higher, Roth wins. At equal rates they tie mathematically.
What are the 2026 IRA contribution limits?
$7,500 if under 50, $8,600 at 50+ ($1,100 catch-up). The cap is shared across Traditional and Roth IRAs.
What are the 2026 Roth IRA income limits?
Direct Roth contributions phase out at $153,000-$168,000 MAGI (single) and $242,000-$252,000 (married filing jointly).
What is a backdoor Roth IRA?
A legal strategy for high earners: make a nondeductible Traditional IRA contribution, then convert it to Roth. Watch the pro-rata rule if you hold other pre-tax IRA money.
Do Roth IRAs have required minimum distributions?
No — Roth IRAs have no RMDs for the original owner. Traditional IRAs require withdrawals starting at age 73.