The Roth vs. traditional IRA choice comes down to when you pay tax: Apollon Wealth Management sees it as paying now on contributions (Roth) or later on withdrawals (traditional). Both accounts share the same $7,500 contribution limit for tax year 2026, combined.
For a business owner, the better answer often hinges on income in the year of a sale, which can swing a lot. We take this as one decision with a deadline, and we want the numbers in front of you before you pick.
Roth IRA and traditional IRA compared
Look at the first two rows: the tax happens at opposite ends. The limits row matters most to owners, because a good sale year can push you out of Roth eligibility.
| Roth IRA | Traditional IRA | |
|---|---|---|
| Tax on contributions | Taxed now, no deduction | Often deductible |
| Tax on qualified withdrawals | None | Taxed as ordinary income |
| Required minimum distributions | None for the owner | Start at 73 or 75 |
| Income limits to contribute | $153,000-$168,000 single | None to contribute |
| 2026 contribution limit | $7,500 combined | $7,500 combined |
| Often suits | Lower income now, higher later | Higher income now |
How much does the tax rate you expect later matter?
It matters more than anything else. If your rate in retirement will be higher than today's, paying tax now through a Roth usually wins; if it will be lower, the traditional deduction usually wins.
Take a hypothetical owner in the 24 percent bracket putting in $7,500. A traditional deduction saves $1,800 of tax this year (7,500 x 0.24). If she later withdraws at 32 percent, that money costs her $2,400 in tax. Paying the $1,800 now through a Roth would have been cheaper. Reverse the rates and the traditional account wins. Returns are never certain and investments can lose money, so these are illustrations only.
When a business sale changes the answer
A sale year can lift your income well past the Roth phase-out, which is $242,000-$252,000 for married couples filing jointly. But the year before and the years after a sale are often lower, and those can be the best Roth years.
Because of that, Apollon Wealth Management looks at your expected income for the next few years before suggesting either account, and we estimate the tax cost of each path. Our Business sale tax planning work sits alongside this choice, though it's a separate decision with its own deadline.
How to decide, one step at a time
First, check whether you're under the Roth income limit for the year; if not, the choice is made for you. Then estimate this year's rate against the rate you expect after the sale. Last, look at what else you hold: a large pre-tax balance in a 401(k) or a cash balance plan argues for some Roth money.
A rule of thumb: when this year's income is unusually high, lean traditional; when it's unusually low, lean Roth. We'd add one honest limit. Neither account matters much if the IRA is small next to the value of the business, so the sale decisions usually come first.
- Confirm your income against the Roth limit
- Compare today's rate with the rate you expect
- Check your existing pre-tax balances
- Decide before the tax-filing deadline for that year
Your questions about Apollon Wealth Management, answered
Can I have both a Roth IRA and a traditional IRA?
Yes, you can hold both. The $7,500 contribution limit for tax year 2026 applies to the two combined, so you can split it between them however you like. Many owners do this when they can't tell which tax rate will be higher.
What if my income is too high for a Roth IRA after a sale?
You can't contribute directly once your income passes the phase-out, which ends at $168,000 for single filers and $252,000 for joint filers in 2026. A traditional IRA has no income limit to contribute, though the deduction may shrink if you have a workplace plan.
Do Roth IRAs have required minimum distributions?
No, a Roth IRA has no required minimum distributions during the owner's life. A traditional IRA does, starting at age 73, or age 75 if you were born in 1960 or later. That difference matters if you won't need the money soon.
This content is general information only and does not constitute investment, tax or legal advice tailored to your circumstances. Investing involves risk, including possible loss of principal. Past performance is no guarantee of future results. Consult a qualified professional before making any financial or legal decision.