Retirement & Savings

What Is a Roth IRA?

A Roth IRA is a US individual retirement account funded with after-tax money. Contributions are not tax-deductible, but investment growth and qualified withdrawals in retirement are tax-free. Eligibility to contribute directly phases out at higher incomes, and annual contribution limits are set by the IRS.

How a Roth IRA Works

Contributions go in after tax, grow without annual tax on gains, and can be withdrawn tax-free in retirement if the account has been open at least five years and the owner is 59½ or older, among other conditions.

Roth vs. Traditional IRA

The main difference is timing: a traditional IRA may give a tax deduction now and taxes withdrawals later, while a Roth IRA taxes contributions now and not qualified withdrawals later. Which is more favorable depends largely on current versus future tax rates.

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🏛️ Roth vs. Traditional IRA Calculator Compare the after-tax retirement value of both account types. Calculate → 🏦 401(k) Calculator Estimate your retirement savings using real 2026 IRS contribution limits. Calculate →

🔗 Related Terms

Traditional IRA 401(k) Plan Marginal Tax Rate Compound Interest

More Retirement & Savings Terms

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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.