What Is Roth IRA?
A retirement account funded with post-tax dollars that grows and withdraws tax-free in retirement.
Definition
A Roth IRA is funded with money you have already paid taxes on. The earnings grow tax-free, and qualified withdrawals after age 59½ (with at least 5 years in the account) are also tax-free. 2026 contribution limit: $7,000 ($8,000 if 50+). Income limits apply. Roth makes sense if you expect to be in a higher tax bracket in retirement, or you want tax diversification. Contributions (not earnings) can be withdrawn anytime without penalty.
Example
Contributing $7,000/year for 30 years at 7% growth, all withdrawals after 59½ are tax-free. Final balance: $660,000+.
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Try the Retirement CalculatorRelated Terms
Traditional IRAA retirement account funded with pre-tax dollars that defers taxes until withdrawal in retirement.401(k)A US employer-sponsored retirement plan with tax advantages and often an employer match.Compound InterestInterest calculated on both the original principal and the accumulated interest from prior periods.