What is the Traditional IRA?
A traditional IRA gives you a tax deduction on contributions today (subject to income and workplace-plan rules) and grows tax-deferred. You pay ordinary income tax on withdrawals in retirement, and required minimum distributions begin at age 73.
The 2026 limit is $7,500, or $8,600 if you are 50 or older — a shared limit across all your IRAs, traditional and Roth combined.
Formula & worked example
After-tax value = Balance × (1 − retirement tax rate)
Worked example: $7,500 a year from 35 to 65 at 7%, starting from $15,000 → about $872,000. You saved roughly $54,000 in tax while contributing at a 24% rate. At a 22% retirement rate you owe about $192,000 on withdrawal, leaving roughly $680,000 after tax.
How to use this traditional ira calculator
- Enter your annual contribution up to the IRA limit.
- Set your current marginal tax rate to value the deduction.
- Set your expected retirement rate — most people drop one bracket.
- Compare the after-tax value against a Roth to decide which suits you.
Smart tips
- The deduction may be limited or eliminated if you or a spouse is covered by a workplace retirement plan and your income is high.
- RMDs begin at 73 and are taxed as ordinary income — plan withdrawals before then to smooth your tax bracket.
- If your current bracket is high and you expect a lower one later, traditional beats Roth; the reverse also holds.
- You can convert a traditional IRA to a Roth at any time, paying tax on the converted amount — useful in a low-income year.
- Early withdrawals before 59½ generally incur ordinary income tax plus a 10% penalty.
Frequently asked questions
What is the traditional IRA contribution limit?
$7,500 for 2026, or $8,600 if you are 50 or older. This limit is shared across all your traditional and Roth IRAs combined.
Is my traditional IRA contribution deductible?
Fully deductible if neither you nor your spouse is covered by a workplace plan. If covered, the deduction phases out above certain income levels.
When do required minimum distributions start?
At age 73 under current rules. Failing to take an RMD triggers a penalty of 25% of the shortfall.
Can I have both a traditional and Roth IRA?
Yes, but the annual limit applies across both combined — you cannot contribute the full amount to each.
Want the theory behind the numbers? Read our retirement guides on the Money Blog.
Written by Gurjeet Singh, Sharpen Solutions. Last reviewed 15 Oct 2026. Sources: IRS — IRA contribution limits, IRS — required minimum distributions: ages and the uniform lifetime table. How we check these numbers.