Question 1

What is the Roth IRA contribution limit?

Accepted Answer

The IRS sets an annual limit that changes over time, with a higher "catch-up" amount once you reach age 50. Contributions must also come from earned income, and eligibility phases out at higher incomes. Check the current year's limit before maxing out.

Question 2

Why is a Roth IRA tax-free?

Accepted Answer

You contribute money you have already paid income tax on. In exchange, qualified withdrawals in retirement — both your contributions and all the investment growth — are completely tax-free, unlike a traditional IRA or 401(k) where withdrawals are taxed.

Question 3

Roth IRA vs traditional IRA — which is better?

Accepted Answer

A Roth is often better if you expect to be in the same or higher tax bracket in retirement, or you want tax-free flexibility. A traditional IRA gives you a tax deduction now. Many savers use both to diversify their future tax exposure.

Question 4

Can I withdraw from a Roth IRA early?

Accepted Answer

You can withdraw your own contributions at any time without tax or penalty. Withdrawing investment growth before age 59½ (and before the account is 5 years old) can trigger taxes and a penalty, with some exceptions.

Question 5

What return should I assume?

Accepted Answer

A diversified long-term portfolio has historically returned about 6–8% annually before inflation. Using 6–7% is a reasonable planning assumption for a multi-decade horizon.

Roth IRA Calculator