Roth IRA
Definition
A retirement account where you contribute after-tax money (so you don't get an immediate tax deduction), but all the growth and withdrawals in retirement are completely tax-free. It's the opposite of a 401(k). You can withdraw your contributions anytime penalty-free.
Why It Matters
If you think you'll be in a higher tax bracket in retirement than you are now, a Roth is powerful. Young people often benefit most because they have decades for tax-free growth. Plus, the flexibility to withdraw contributions makes it a pseudo-emergency fund.
Example
Contribute $7,000 at age 25, earn 7% annually. By 65, that grows to ~$1.4 million — all tax-free in retirement. Compare that to a traditional IRA where you'd owe taxes on the entire amount.