A retirement account where you pay tax now and withdraw tax-free later. Perfect for people expecting higher taxes in the future.
Key Takeaways
- Contributions use after-tax dollars
- Growth and withdrawals are tax-free in retirement
- Start early – time is the superpower
What Is a Roth IRA
A retirement account where you pay tax now and withdraw tax-free later. Perfect for people expecting higher taxes in the future.
Income Limits Matter
High earners phase out of direct contributions – check current thresholds before funding.
Why Start at 25 Not 45
Decades of tax-free compounding turn modest monthly sums into serious retirement wealth.
Quick Comparison
| Account | Tax Now | Tax Later |
|---|---|---|
| Traditional IRA | Deductible | Taxed on withdrawal |
| Roth IRA | After-tax | Tax-free |
Frequently Asked Questions
Can I withdraw contributions?
You can pull your own contributions anytime; earnings have rules – never treat it like a piggy bank.
How much can I contribute?
There is an annual cap that adjusts for inflation; verify the current number.