Breakdown
How it works
Roth contributions are made after tax and grow tax-free. Traditional contributions are deductible now but taxed on withdrawal. For the same after-tax cash outlay, a traditional contribution is larger (grossed up by your current tax rate); if your retirement rate is lower than today's, traditional wins, and vice versa. Roth also has no required minimum distributions.
Formula
Worked example
$7,500 a year for 30 years at 7%: Roth ≈ $785,000 tax-free. Traditional on equal outlay at 22% now / 15% later ≈ $837,000 after tax — traditional edges it; at 22% / 24% Roth wins.
Frequently asked questions
What are the 2026 Roth IRA limits?
$7,500 ($8,600 at 50+). Contributions phase out from $153,000 to $168,000 MAGI (single) and $242,000 to $252,000 (joint). Above that, use a backdoor Roth.
Can I withdraw early?
Contributions any time tax- and penalty-free. Earnings are tax-free after age 59½ and five years; earlier withdrawals of earnings face tax and 10% penalty with exceptions (first home $10,000, education).
Can non-US residents contribute?
Only with US earned income not excluded by the FEIE. Most expats in the Gulf cannot contribute while abroad.