Definition

A Roth IRA is funded with money you have already paid tax on, so qualified withdrawals in retirement are entirely tax-free, and contributions (not earnings) can be withdrawn any time without penalty. Eligibility to contribute directly phases out above certain income levels. It has no required minimum distributions during the owner's lifetime.

1. Roth vs Traditional IRA: Which Is Right for You?

   The Roth vs Traditional IRA question comes down to one thing: when do you expect to pay a lower tax rate? Here is how to think through it for your specific situation.
   retirement

1. Traditional IRA

   An individual retirement account where contributions may be tax-deductible now and taxed at withdrawal.
2. Backdoor Roth

   A legal way for high earners to fund a Roth IRA despite income limits.
3. Modified Adjusted Gross Income (MAGI)

   AGI with certain deductions added back, used to test eligibility for many tax benefits.