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Grow your money tax-free and never pay taxes on it again.
A Roth IRA (Individual Retirement Account) is a retirement savings account you open yourself — not through an employer. You contribute money you've already paid taxes on, and in exchange, the IRS lets your investments grow completely tax-free.
The magic of a Roth IRA is the back-end tax break. Unlike a 401(k) or Traditional IRA, you get no deduction today — but every dollar you withdraw in retirement (including decades of gains) is 100% tax-free.
You fund your Roth IRA with money you've already paid income tax on. No deduction now — but the payoff comes later.
Your contributions are invested in stocks, bonds, ETFs, or mutual funds. All growth is completely tax-free inside the account.
After age 59½ and once the account is 5 years old, you can withdraw everything — contributions and earnings — completely tax-free.
| Who | Contribution Limit |
|---|---|
| Under age 50 | $7,000 |
| Age 50 and older (catch-up) | $8,000 |
| Filing Status | Phase-Out Range (MAGI) |
|---|---|
| Single / Head of Household | $150,000 – $165,000 |
| Married Filing Jointly | $236,000 – $246,000 |
| Married Filing Separately | $0 – $10,000 |
* Above the phase-out range, you cannot contribute directly. Look into the Backdoor Roth strategy.
Key Insight
If you expect to be in a higher tax bracket in retirement than you are today, paying taxes now (Roth) beats paying them later (Traditional). For most young earners, the Roth IRA is the smarter long-term move.
An individual retirement account where you contribute after-tax dollars. Your money grows tax-free and qualified withdrawals in retirement are completely tax-free.
You pay income tax on the money before putting it into a Roth IRA — but you'll never pay taxes on that money or its growth again.
The IRS restricts Roth IRA contributions based on your Modified Adjusted Gross Income. Above a certain threshold, your contribution limit phases out.
To withdraw earnings tax-free, your Roth IRA must be at least 5 years old AND you must be 59½ or older.
| Feature | Roth IRA | Traditional IRA |
|---|---|---|
| Tax on contributions | After-tax (no deduction) | Pre-tax (deductible) |
| Tax on withdrawals | Tax-free ✓ | Taxed as income |
| RMDs required? | No | Yes, starting at 73 |
| Best for | Lower bracket now | Higher bracket now |
| Income limits? | Yes | No (deduction may be limited) |
Quick Summary