Personal Finance

Roth IRA

A retirement account you fund with after-tax money so withdrawals in retirement are tax-free.

With a Roth IRA you pay tax on the money now, then never again: qualified withdrawals in retirement, including all the growth, are tax-free. That makes it especially powerful when you are young and in a lower tax bracket, because decades of gains escape tax entirely.

For example

Contribute $6,000 today, let it grow to $60,000 over decades, and in retirement you can withdraw the full $60,000 tax-free.

Related terms

IRA (Individual Retirement Account)401(k)Compound Interest

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