What is a Roth IRA?
A Roth IRA is an after-tax qualified account that encourages you to save for retirement by allowing contributions and earnings to grow tax free. As opposed to a traditional IRA that is funded using before-tax dollars, a Roth IRA is funded using earnings that have already been taxed, offering a tax benefit. This also means that your withdrawals in retirement typically will not be taxed – compared to a traditional IRA, whose withdrawals are taxed as income. Once you’re age 59 ½ and have had a Roth IRA account for five years or longer, any money that you take out including earnings will not be taxable.1