A Roth IRA is a special retirement account where you pay taxes on money going into your account and then all future withdrawals are tax exempt.
Although there is no up-front tax deduction for Roth IRA contributions as there is with a Traditional IRA, Roth distributions are tax-free when you follow the rules. And because every penny you contribute to a Roth IRA is your money—not a tax-subsidized gift from Uncle Sam—you can tap your contributions (but not your earnings) any time tax-free and penalty-free.
Roth IRAs make the most sense if you expect your tax rate to be higher during retirement than your current tax rate. That makes Roth IRAs an ideal savings vehicle for young, lower-income workers who won’t miss the upfront tax deduction and who will benefit from decades of tax-free, compounded growth. Roth IRAs also appeal to anyone who wants to minimize their tax bite in retirement as well as older, wealthier taxpayers who want to leave assets to their heirs in a tax-free investment. You can contribute to a Roth IRA at any age as long as you have earned income from a job.