A Roth IRA is a type of individual retirement account allowing someone to set aside after-tax income for retirement. So you pay income tax on funds you put into your Roth IRA but don’t pay any tax on qualified withdrawals.
This is the opposite of a traditional IRA. With a traditional IRA, you pay tax on the withdrawals in retirement but not on contributions today. Because of their unique structure, Roth IRAs are best for younger investors with a long time horizon to retirement. Those of us who are closer to retirement usually get a better deal with a traditional IRA.
A Roth IRA is a type of brokerage account you can open with any major investment company and some banks. Just like a regular brokerage account, you can buy and sell exchange-traded funds (ETFs), mutual funds, stocks, bonds, and other assets. But unlike a regular investment account, you won’t pay tax on profits when you withdraw as long as you follow IRS rules.