Roth IRA

Definition

A Roth IRA is a type of individual retirement account where contributions are made with money that has already been taxed. As a result, your investments can grow tax-free, and you can make qualified withdrawals in retirement without paying any taxes.

Example

You contribute $6,000 to a Roth IRA. That money has already been taxed. It grows for 30 years. When you withdraw the money in retirement, both your original contributions and all the investment earnings are tax-free.