A Roth IRA is a type of retirement savings account that is funded with after-tax money. This means that you do not get a tax break for saving money in this account today. However, Roth IRAs grow tax-free. When you take money out of the account in retirement, you do not have to pay any tax on the money you put in, or the growth, assuming you are at least 59 ½ and have had the account for at least 5 years.

If you want to take money out before you have met these requirements, you can withdraw your original contributions at any time, without any tax implications or penalties. However, you will have to pay taxes and a penalty on the growth of your money. There is an exemption for first time homebuyers that allows you to withdraw up to $10,000 of the growth without penalty or taxes before you reach age 59 ½, assuming your account has been open for at least 5 years.

There are income limits for adding money directly to a Roth IRA, but there are other ways to get money into a Roth account that your Domain Advisor can discuss with you further, if you are over the limits.