Faith Aligned Investing begins with the understanding that God owns everything, and we are stewards of what He entrusts to us.
Retirement planning, including (IRAs), can be viewed as part of wise, intentional stewardship—planning responsibly for the future while remaining aligned with biblical values.
- Traditional IRAs, introduced in 1974, are held by approximately 43 million U.S. households.
- Roth IRAs, established under the Taxpayer Relief Act of 1997, are owned by nearly 35 million households.¹
- Though both are retirement accounts, they differ in how contributions, growth, and distributions are taxed.
Disclosure: This material is provided for general educational purposes only and is not intended to provide tax, legal, or investment advice.
What Is a Traditional IRA?
A Traditional IRA allows eligible individuals to make contributions that may be tax-deductible (Pre-Tax), subject to income limits and participation in a workplace retirement plan.
How Does a Traditional IRA Work?
Contributions may reduce current taxable income.
Account growth is tax-deferred.
Withdrawals are taxed as ordinary income.
Distributions taken before age 59½ may be subject to a 10% federal tax penalty, unless an exception applies.
Required minimum distributions (RMDs) generally begin at age 73.²,³
From a faith-aligned perspective, a Traditional IRA may support stewardship goals by helping individuals manage current tax obligations while planning prudently for future needs.
What Is a Roth IRA?
A Roth IRA is funded with after-tax dollars (Post-tax), meaning contributions are not deductible when made.
How Does a Roth IRA Work?
Qualified withdrawals of earnings may be tax-free if:
The account has been open for at least five years, and
Withdrawals occur after age 59½.
Roth IRAs do not require RMDs during the owner’s lifetime.
For many faith-aligned investors, the Roth IRA offers long-term flexibility, supporting future generosity, legacy planning, and income stewardship later in life.
What Are the Income Limits for IRA Contributions in 2025?
Roth IRA Contribution Phase-Out
Single filers (and heads of household):$150,000–$165,000
Married filing jointly:$236,000–$246,000
Married filing separately:$0–$10,000 (very limited eligibility)
These ranges are based on modified adjusted gross income (MAGI) and determine whether you can make a full, partial, or no direct Roth IRA contribution for the 2025 tax year.
Traditional IRA Deduction Phase-Out (If Covered by a Workplace Plan)
Single filers (covered by workplace retirement plan):$79,000–$89,000
Married filing jointly (covered by workplace plan):$126,000–$146,000
Married filing jointly (not covered, but spouse is):$236,000–$246,000
Married filing separately (covered by workplace plan):$0–$10,000
What Are the Income Limits for IRA Contributions in 2026?
Traditional IRA Deduction Phase-Out (If Covered by a Workplace Plan) ⁴
Married filing jointly: $129,000–$149,000
Single filers: $81,000–$91,000
Roth IRA Contribution Phase-Out⁴
Married filing jointly: $242,000–$252,000
Single filers: $153,000–$168,000
How Much Can Be Contributed to IRAs Each Year?
For 2025 (You can contribute up until around April 15, 2026 - tax deadline):
Under age 50: up to $7,000 total to all IRAs (Roth + Traditional combined)
Age 50 or older: up to $8,000 (includes $1,000 catch-up)
For 2026:
The combined contribution limit for all IRAs is $7,500.
Individuals age 50 or older may contribute up to $8,600 with catch-up contributions.⁴
These limits apply across all Traditional and Roth IRAs combined.
How Do Traditional and Roth IRAs Compare?
| Feature | Traditional IRA | Roth IRA |
|---|---|---|
| Tax-deductible contributions | Yes* | No |
| Tax-deferred growth | Yes | Yes |
| Tax-free withdrawals | No** | Yes*** |
| Income limits (2026) | Deduction phases out | Eligibility phases out |
| Required distributions at age 73 | Yes | No |
** Taxed as ordinary income; penalties may apply
*** Five-year rule and age requirements apply
How Does Faith Aligned Investing Shape IRA Decisions?
Faith Aligned Investing emphasizes:
Stewardship over ownership
Wisdom over speculation
Long-term faithfulness over short-term gain
Planning with purpose, not fear
Choosing between a Traditional and Roth IRA is not about maximizing returns alone, but about aligning financial tools with personal convictions, family responsibilities, and future generosity goals.
Frequently Asked Questions (FAQs)
Is one IRA more faith-aligned than the other?
No. Both Traditional and Roth IRAs can support faith-aligned goals when used thoughtfully and consistently with personal values.
Can I contribute to both types of IRAs?
Yes, provided total contributions remain within annual limits.
Do IRA rules ever change?
Yes. Contribution limits, income thresholds, and tax treatment may change over time.
Can a Roth conversion be undone?
No. The Tax Cuts and Jobs Act of 2017 eliminated the ability to reverse Roth conversions.⁵
Does Faith Aligned Investing replace professional advice?
No. Faith Aligned Investing complements professional guidance and encourages collaboration with qualified financial and tax professionals.
Final Thought
Traditional and Roth IRAs are tools—neither inherently good nor bad. When viewed through the lens of Faith Aligned Investing, these accounts become part of a broader calling to manage resources wisely, plan responsibly, and remain faithful with what has been entrusted to us.
Sources
ICI.org, March 2025
IRS.gov, 2025
IRS.gov, 2025
IRS.gov, 2025
Tax Cuts and Jobs Act of 2017