Roth IRA
A US retirement account funded with after-tax dollars, where qualified withdrawals in retirement are tax-free.
A Roth IRA is funded with money you've already paid tax on. In exchange, qualified withdrawals in retirement — including all the growth — come out completely tax-free. It tends to favor people who expect to be in the same or a higher tax bracket in retirement than they are now, since the tax is paid upfront while rates are known.
Worked Example
Contributing $7,000/year to a Roth IRA for 30 years at 7% average growth would produce a balance where the entire amount, including well over $500,000 in growth, comes out tax-free in retirement.
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