LESSON 1 OF 365 · 0 COMPLETE
#RetirementRoth IRA
A Roth IRA is a retirement account funded with after-tax dollars. Investments can grow without annual tax bills, and qualified retirement withdrawals are generally federal-income-tax-free.
Why it matters
Paying tax before contributing can be valuable when you expect your future tax rate to be similar or higher. Contribution and income limits still apply.
IN PRACTICE
If $3,000 grows to $12,000 and the withdrawal is qualified, the $9,000 gain can generally leave the account without federal income tax.
Build the skill
- ✓Define the term in your own words
- ✓Identify one benefit and one limitation
- ✓Compare it with a nearby alternative
- ✓Write down one question to research
KNOWLEDGE CHECK