Traditional vs. Roth Retirement Contributions — Is It Time for a Catch-Up?

Retirement planning isn’t just about setting money aside; it’s about choosing the right type of account to maximize your savings. The two most common retirement account types are Traditional and Roth. Understanding the differences can help you make smart choices — especially if you’re nearing retirement and eligible for catch-up contributions.

With a Traditional IRA or 401(k), your contributions are generally tax-deductible. This means you lower your taxable income today, but you’ll pay taxes when you withdraw funds in retirement. This option is ideal if you expect to be in a lower tax bracket later in life.

A Roth IRA or Roth 401(k) flips the equation. Contributions are made with after-tax dollars, but withdrawals in retirement are tax-free (as long as you meet the requirements). This is a powerful tool if you anticipate being in the same or higher tax bracket when you retire.

For those age 50 and older, the IRS allows catch-up contributions, giving you the opportunity to contribute more than the standard annual limits. For 2025, you can contribute an extra $11,250 to your 401(k) and an extra $1,000 to an IRA. These additional savings can make a significant difference in the long run.

Not sure which path is right for you? A financial strategy that blends both Roth and Traditional accounts may provide tax flexibility in retirement. At Tax Pros HQ, we help clients understand their options and build a retirement plan that fits their goals — while optimizing their tax situation today and tomorrow.