Share:
Glossary Finance

Roth IRA

A Roth IRA is a US retirement account funded with after-tax money, whose growth and qualified withdrawals are tax-free.

Last reviewed:

AdSense Placeholder
Slot: header_reference_page

In more detail

You pay tax on the contribution now and none on qualified withdrawals. If your tax rate is the same later, a Roth and a traditional account end up identical; a Roth wins if your rate rises. Income limits may restrict who can contribute directly.

Example

A $6,000 yearly contribution at 7% for 30 years grows to about $566,765.

Try these tools

Roth IRA Calculator

Project your Roth IRA balance at retirement -- fully tax-free, since Roth contributions are made with after-tax dollars.

See also

  • Glossary IRA
    An IRA (individual retirement account) is a US personal retirement account with tax advantages that you open yourself.
  • Glossary 401(k)
    A 401(k) is a US employer-sponsored retirement account to which you contribute from your paycheck, often with an employer match.
  • Guide How Retirement Savings Work
    Regular saving, employer match, fees and inflation, traditional versus Roth, the 25x rule and 4% withdrawal test, annuities.
Back to Glossary
AdSense Placeholder
Slot: footer_leaderboard