A Roth IRA is a retirement savings account where you contribute money after taxes, and then all qualified withdrawals in retirement are tax-free.
In Depth
A Roth IRA is an individual retirement arrangement that allows your investments to grow tax-free. You contribute money that has already been taxed, meaning you don't get a tax deduction for your contributions. However, when you take money out in retirement, as long as you meet certain conditions (like being over 59½ and having the account for at least five years), all withdrawals are completely tax-free. This can be very beneficial if you expect to be in a higher tax bracket in retirement.
Example
Sarah, a 30-year-old, contributes to her Roth IRA each month, knowing that when she retires, her withdrawals will not be taxed.