Finance glossary
Roth IRA
Definition
A retirement account funded with after-tax money that grows tax-free.
A Roth IRA is funded with after-tax dollars, so contributions are not deductible, but qualified withdrawals in retirement, including all growth, are completely tax-free. It suits those who expect to be in a higher tax bracket later and offers flexible withdrawal of contributions.
In a sentence
Because he funded his Roth IRA with after-tax dollars, every penny of growth would come out tax-free in retirement.
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