An IRA is one of the most common retirement savings accounts on the market. But for many investors, who are accustomed to relying on an employer-sponsored 401(k) or a similar plan, choosing between IRAs can feel like a mystery, and the choice between a Roth IRA vs traditional IRA option can feel like a puzzle worthy of Sherlock Holmes.

Here’s the good news: investing in an IRA isn’t rocket science, and the choice between a Roth and a traditional IRA is actually pretty straightforward.

Here’s a look at the key differences between the two, and how to choose the right account for you.

What is a Traditional IRA?

A traditional IRA is a type of tax-advantaged retirement savings account. Think of it kind of like a box, or a wrapper—it’s a tax-advantaged holding account for you to store and grow qualifying investment assets. In fact, you can hold almost any investment in an IRA, but for a few notable exceptions.

In a traditional IRA, you make investments from pre-tax income which then grows on a tax-deferred basis. You get a tax write-off for the tax year when you make the contribution, with some income limitations if your IRA is employer-sponsored.

Here’s the catch: because you contribute pre-tax income, it’s considered untaxed income when you make withdrawals in retirement. That means you have to pay taxes on all traditional IRA withdrawals in retirement. And while you can make early withdrawals, the IRS hits you with a 10% early withdrawal penalty fee, as is the case with all IRAs.

What is a Roth IRA?

A Roth IRA is another type of individual retirement account—basically another tax-advantaged box to hold (almost) all of your investments under one tax-advantaged umbrella.

A Roth IRA allows you to make contributions with after-tax income (as in, you’ve already paid all your income tax dues, and you’re paying with the money that’s left over). Because the money has already been taxed, the IRS has already taken its slice of the pie, so you don’t need to pay taxes on it again.

Yup, your contributions grow tax-free, including your capital gains. And when you make withdrawals, you don’t get hit with another round of income tax (though you might still get hit with an early withdrawal penalty, depending on your timing).

Roth IRA vs Traditional IRA: Key Differences

Once you inspect the details, it’s easy to spot the differences in a Roth IRA vs traditional IRA.

First are your contributions. A traditional IRA takes contributions from pre-tax income, while a Roth IRA taxes contributions from after-tax income.

Second, because of the shift between pre-tax or after-tax income, traditional and Roth IRAs offer different tax advantages. A traditional IRA is tax-deferred, while a Roth IRA is tax-free (sort of, given that you already paid taxes on the money you contribute).

Third, the difference in tax advantages translates into different tax write-offs. Namely, you can write off traditional IRA contributions for the tax year in which you make them, but you don’t get any write off for Roth contributions.

Finally, Roth IRAs come with certain income qualification limits that traditional IRAs lack. You can qualify for a Roth IRA if:

• You’re single or head of household with an adjusted gross income of less than $129,000
• You’re married or filing jointly with an adjusted gross income of less than $204,000
• You’re married, filing separately, don’t live with your spouse, and have an adjusted gross income of less than $129,000

If your income exceeds the threshold to make a full contribution, the IRS will allow you to make contributions on a reduced basis, which is a sliding scale based on income ranges.

How to Choose the Right IRA for Your Needs

Once you understand the key difference between a Roth IRA vs traditional IRA option, figuring out which IRA you need is actually pretty straightforward.

Before you get started, check your IRA eligibility. Remember, income thresholds vary based on your filing status, how much you earned this year, and whether you also have a work-based retirement plan. Depending on your situation, those qualifiers may make the decision for you.

If you’re free to take your pick of a traditional or a Roth IRA, figuring out which one you need is a question of the benefits you want, how good of an investor you are, and your tax situation once you start making withdrawals.

A traditional IRA is a better fit if you expect to be in the same or a lower tax bracket in retirement. This often happens if you see a significant income reduction once you leave work, which can be to your advantage tax-wise. A Roth IRA is better for someone who expects to be in a higher tax bracket in retirement—which can actually happen once you’ve paid off all your debts and the kids are moved out.

However, if you can qualify for one, most savers see more benefits from a Roth IRA than a traditional IRA. That’s because most people aren’t disciplined enough savers to end up with as much after-tax money in a traditional IRA that they would have in a Roth.

Basically, both IRAs have tax benefits, but the tax benefits of a Roth are far enough in the future that you won’t be tempted to spend the money elsewhere (as opposed to a traditional IRA, where you see tax benefits every year and most savers wind up wasting money they should put in their accounts).

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