◈ GLOSSARY · RETIREMENT
Roth IRA.
A definition, in plain English — with the books that teach it.
Reviewed by ClearValue Editorial Team · Jun 27, 2026
◈ DEFINITION
What it means
Definition
An individual retirement account funded with after-tax dollars, where qualified withdrawals in retirement come out tax-free — including all the growth. The 2026 contribution limit is $7,000 ($8,000 at 50+), and direct contributions phase out at higher incomes (roughly $150k single / $236k married filing jointly). Best for people who expect to be in the same or higher tax bracket later, or who simply want tax diversification.
◈ IN PRACTICE
Example
Contributing $7,000/year from age 30 to 65 at a 7% real return ends around $968,000 — and every dollar withdrawn after 59½ is tax-free, vs. taxed as ordinary income in a traditional IRA.