Definition
A retirement account where you contribute after-tax dollars, allowing your investments to grow tax-free and offering tax-free withdrawals in retirement.
What to consider
- Remember contributions are made with after-tax dollars.
- Enjoy tax-free withdrawals when you retire.
- Plan regular contributions to maximize its benefits over time.
Real world scenarios
- Sophia chooses a Roth IRA for retirement savings, confident she’ll benefit from tax-free withdrawals later in life.
- After maxing his 401(k), Kyle diverts extra funds into a Roth IRA, balancing both pre-tax and after-tax retirement strategies.
- With no required minimum distributions, a Roth IRA also supports Linda’s estate planning goals, leaving more potential for heirs.
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