Roth IRA
An account you fund with taxed money and withdraw from tax free later.
Where it is explained in full
Money at every level: what changes as the numbers grow, from a first paycheck to a hundred million. The rules are the same for everyone and the useful ones change at every level. This page walks the whole ladder, what becomes possible at each rung, and the one line that runs through all of it. It explains; it never advises.
An account is not an investment. The single most useful thing to understand about money, and the one most people were never told. The box and the thing inside the box are two different choices.
Roth or traditional: two jars, one tax bill. Pay the tax now or pay it later. That is the whole choice, and it turns on one number nobody knows: what your tax rate will be when you are old.
Workplace plans: the 401(k), the 403(b), and the TSP, from the first paycheck to the last. Everything a person needs to open one, fill it, hold the right things in it, avoid the traps, and carry it with them when they leave. Long on purpose, so that one page is enough.
A definition says what a thing is; it never says whether it fits you. The guides explain how it works and name the professional who confirms it for a particular person. The No Advice Disclosure.
Words beside it
- Backdoor Roth
Contributing to a traditional IRA and converting it to a Roth, used by people over the Roth income limit. Watch the pro rata rule.
- Conversion (Roth)
Moving money from a traditional account to a Roth and paying tax on it now.
- Mega backdoor Roth
After tax 401(k) contributions converted to Roth, where the plan allows it. Large room, rare plans.
- Roth 401(k)
The Roth version inside a workplace plan; no income limit.
Ask about Roth IRA
A model reads this page and answers from it. It will say when the answer is not on the page. Education, not personalized advice.