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Education > Dictionary > R Terms > Roth IRA

Dictionary

Roth IRA

A type of individual retirement account that is funded solely with aftertax (non-deductible) contributions, either annual contributions or rollover contributions from an existing IRA or 401(k) plan. While contributions to Roth IRAs do not reduce current taxes, retirement withdrawals are not taxed as long as qualified withdrawals are taken after age 59½ and the account has been held for at least five years. Unlike tax-deferred accounts, Roth IRAs are not subject to required minimum distributions (RMDs) in retirement.

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