What is a Roth IRA and Should You Have One?

A Roth IRA is a retirement account where you contribute after-tax dollars, but all future withdrawals are tax-free. This differs from traditional IRAs where you get a tax deduction now but pay taxes in retirement.

Key Benefits

• Tax-free withdrawals in retirement
• No required minimum distributions (RMDs)
• Can withdraw contributions anytime penalty-free
• Pass tax-free inheritance to heirs

2025 Contribution Limits

$7,000/year ($8,000 if age 50+)

Income limits: Begins phasing out at $146,000 (single) or $230,000 (married)

Who Should Get One?

Younger workers benefit most (decades of tax-free growth). Also good if you expect higher taxes in retirement or want flexible access to contributions.

Originally published at major financial sites, adapted for NestEggMama readers.