Roth IRA
An individual retirement account funded with after-tax money, whose qualified withdrawals are completely tax-free.
What does roth ira mean?
You get no deduction today, but contributions and all growth come out tax-free in retirement. A Roth wins when your tax rate will be the same or higher later, and it has no required minimum distributions for the owner.
Put it to use
Related terms
Roth IRA — frequently asked
Roth IRA or Traditional IRA — which is better?
Choose a Roth if you expect to be in the same or a higher tax bracket in retirement, since withdrawals are tax-free. Choose Traditional if you want the deduction now and expect a lower bracket later. Many savers split contributions between both.
Who can contribute to a Roth IRA?
Anyone with earned income can, until their modified adjusted gross income exceeds IRS phase-out limits that rise most years. High earners above the cap can still use a “backdoor” Roth by converting nondeductible Traditional IRA contributions.