Roth IRA vs Traditional IRA - What's The Difference? | T. Rowe Price

Open an IRA. Let's get started.

Need help? Call 800-545-1260

Contributing to a new IRA?

Select the type you would like.


Moving money from an existing 401(k) or IRA?

Select your source.

100% of our Retirement Funds beat their 10-year Lipper average as of 9/30/16.*

Account Service Fee

An annual fee of $20 will be charged for each T. Rowe Price mutual fund account with a balance below $10,000. The account service fee, which is intended to help offset the relatively higher costs associated with servicing lower balance accounts, will be automatically deducted from the account's assets. Investors may qualify for a waiver of the account service fee in any of the following three ways:

  • Subscribe to electronic delivery of statements, confirmations, and prospectuses and shareholder reports;
  • Maintain an individual combined balance of $50,000 or more for all T. Rowe Price accounts (including mutual funds, Brokerage, Variable Annuity, and Small Business Retirement Plans); or
  • Qualify for T. Rowe Price Select Client Services based on higher asset levels of $100,000 or more.

Roth IRA vs. Traditional IRA

Roth IRA
Traditional IRA
Pay taxes now. Pay taxes later.
Contributions may be withdrawn at any time without taxes or penalties. Contributions may be tax-deductible.
Earnings may be withdrawn tax-free and penalty-free once you reach age 59½ and the account has been open for at least five years. Earnings grow tax-deferred. You generally pay taxes when you make withdrawals, often in retirement.
No age restrictions for contributions. You must be under age 70½ to contribute.
You may not be eligible to contribute if your income is $131k or more in tax year 2015 and $132k or more in tax year 2016 for single filers or $193k or more in tax year 2015 and $194k or more in tax year 2016 for joint filers. No income restrictions on eligibility to contribute, but possibly on deductibility.
No required minimum distributions (RMDs). Must begin taking required minimum distributions (RMDs) at
age 70½.

Learn more about a Roth IRA

Learn more about a Traditional IRA

Minimums & Maximums

  • Minimum contribution: $1,000 to open an IRA account, with subsequent minimum contribution of $100 per transaction
  • Maximum contribution: $5,500 per year ($6,500 if you are age 50 or over)

Low fees

We offer a wide range of low-cost, no-load investments. Certain account fees are waived if you select our paperless options.

Still unsure? Use our IRA Selection Tool to compare.

Complete this simple four-step questionnaire to help clarify the choice that's right for you.


Are you moving money from another source?

Roll over a 401(k)

A Rollover IRA is one of several options to consider for your former workplace retirement plan, such as a 401(k).


Convert your T. Rowe Price Traditional IRA to a Roth IRA

A Roth IRA offers many advantages over a Traditional IRA, like potentially tax-free withdrawals if you need them. Click here to convert your existing Traditional IRA now, or read more.


Transfer an existing IRA

To simplify your finances, you can consolidate assets by transferring an existing IRA account to T. Rowe Price.

The principal value of the Retirement Funds and Target Funds (collectively the "target date funds") is not guaranteed at any time, including at or after the target date, which is the approximate year an investor plans to retire (assumed to be age 65) and likely stop making new investments in the fund. If an investor plans to retire significantly earlier or later than age 65, the funds may not be an appropriate investment even if the investor is retiring on or near the target date. The target date funds' allocations among a broad range of underlying T. Rowe Price stock and bond funds will change over time. The Retirement Funds emphasize potential capital appreciation during the early phases of retirement asset accumulation, balance the need for appreciation with the need for income as retirement approaches, and focus on supporting an income stream over a long-term retirement withdrawal horizon. The Target Funds emphasize asset accumulation prior to retirement, balance the need for reduced market risk and income as retirement approaches, and focus on supporting an income stream over a moderate postretirement withdrawal horizon. The target date funds are not designed for a lump sum redemption at the target date and do not guarantee a particular level of income. The key difference between the Retirement Funds and the Target Funds is the overall allocation to equity; although they each maintain significant allocations to equities both prior to and after the target date, the Retirement Funds maintain a higher equity allocation, which can result in greater volatility over shorter time horizons.

*20 of our 36 Retirement Funds had a 10-year track record as of 9/30/16. (Includes all share classes.) All 20 of these 20 funds (100%) beat their Lipper averages for the 10-year period. 36 of 36, 36 of 36, and 36 of 36 of the Retirement Funds outperformed their Lipper average for the 1-, 3-, 5-year periods ended 9/30/16, respectively. Calculations are based on cumulative total return. Not all funds outperformed for all periods. (Source for data: Lipper Inc.)