What Is Roth IRA? Meaning & Example
Definition
A Roth IRA is a US retirement account funded with after-tax money, where qualified withdrawals in retirement are tax-free. Income limits and rules apply.
Related terms
An IRA is a US retirement account you open yourself that offers tax advantages for long-term saving. Traditional IRAs may offer tax-deductible contributions, with taxes paid on withdrawal.
401(k)A 401(k) is a US employer-sponsored retirement account that lets workers invest part of their paycheck with tax advantages. Many employers add matching contributions.
Tax-Advantaged AccountA tax-advantaged account offers tax benefits such as deductions, tax-deferred growth or tax-free withdrawals. Rules and limits vary by account type and country.
What is Roth IRA?
A Roth IRA is a US retirement account funded with after-tax money, where qualified withdrawals in retirement are tax-free. Income limits and rules apply.
Can you give an example of Roth IRA?
Contributions grow inside a Roth IRA, and qualified withdrawals decades later are not taxed.