What Is Roth IRA?
A retirement account funded with after-tax dollars; growth and withdrawals are tax-free.
The Full Definition
A Roth IRA is an individual retirement account funded with money you've already paid taxes on. Your contributions grow tax-free and — crucially — qualified withdrawals in retirement are also completely tax-free. For 2026, the contribution limit is $7,000 per year ($8,000 if you're 50+), with income limits that phase out eligibility for higher earners. The Roth IRA is particularly powerful for younger investors who expect to be in a higher tax bracket in retirement than they are today.
Real-World Example
$7,000 invested in a Roth IRA at age 25, growing at 7% annually, becomes approximately $105,000 by age 65 — and every dollar of that growth is withdrawn completely tax-free in retirement.