Retirement and Social Security
Definition
An individual retirement account funded with after-tax money, where qualified withdrawals, including growth, are tax-free.
What it means
With a Roth IRA, you get no deduction when you contribute, but qualified withdrawals in retirement are tax-free. A withdrawal of earnings is qualified if the account has been open at least five years and you are 59 1/2 or older, disabled, or using up to $10,000 for a first home. You can take out your own contributions at any time without tax or penalty. The 2026 contribution limit is shared with traditional IRAs: $7,500, or $8,600 at 50 and older. The amount you can contribute phases out between $153,000 and $168,000 of modified AGI for single filers and between $242,000 and $252,000 for joint filers in 2026. Roth IRAs have no required minimum distributions during the owner's lifetime. Many people use them for tax diversification.
Example
Contributing $7,500 a year for 30 years with a hypothetical 6% yearly return would grow to about $593,000. If withdrawals are qualified, none of it is subject to federal income tax.
Illustrative numbers only. Your situation will differ.