Roth IRA
An individual retirement account funded with after-tax dollars, where qualified withdrawals in retirement, including investment earnings, are completely tax-free.
Understanding Roth IRA
Roth IRAs were created by the Taxpayer Relief Act of 1997. Direct contributions are available to individuals with earned income below IRS limits ($161,000 for single filers, $240,000 for married filing jointly in 2024). Those above these limits can use the backdoor Roth IRA strategy. Roth IRAs have no required minimum distributions during the owner's lifetime.
Why This Matters for Retirement: Understanding Roth IRA is essential for making informed decisions about tax-free retirement income strategies. Whether you are evaluating an IUL policy, planning Roth conversions, or comparing retirement vehicles, this concept directly affects your outcomes.