Financial Terms / Q - R / Roth Individual retirement account (Roth IRA)

Roth Individual retirement account (Roth IRA)

The Roth Individual retirement account (Roth IRA) is a tax-advantaged account used to save for retirement. You can only contribute after-tax dollars to a Roth IRA; however, you can withdraw them tax and penalty-free after age 59½ and once the account has been open for five years.

You only pay taxes on the money you put into a Roth IRA, but all the withdrawals you make are tax-free during retirement.