Roth IRA

A Roth IRA is a retirement account funded with after-tax contributions, meaning there is no upfront tax deduction, but qualified withdrawals in retirement, including all investment growth, are entirely tax-free. It is the mirror image of a traditional IRA's tax treatment.

The Roth's appeal grows with time horizon and expected future tax rates: someone who expects to be in a higher tax bracket in retirement than they are today, or who simply wants decades of investment growth to never be taxed at all, tends to favor a Roth over a traditional account.