# Roth IRA

A Roth IRA is a retirement account funded with after-tax dollars, meaning withdrawals in retirement — including all investment growth — are completely tax-free. Contributions (but not earnings) can be withdrawn anytime without penalty.

## Why it matters

A Roth IRA is one of the most powerful wealth-building tools available because tax-free growth over decades is extraordinarily valuable. If you contribute $6,500/year from age 25 to 65, you'd contribute $260,000 — but at 7% returns, the account would hold approximately $1.3 million, all withdrawable tax-free. No other account offers this benefit.

Example

The 2024 Roth IRA contribution limit is $7,000 ($8,000 if 50+). Income phase-outs begin at $146,000 for single filers and $230,000 for married filing jointly.

## How Ray helps

Ray tracks contributions and growth in your connected Roth IRA. Try to ensure you're on track to max out the annual limit.

Terminal

`$ ray "how much have I contributed to my Roth IRA this year?"`

## Related terms

[401(k)\
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A 401(k) is an employer-sponsored retirement savings plan that lets you contribute pre-tax income (traditional) or after-tax income (Roth 401k), often with an employer match.](/content/learn/401k/index.html) [Compound Interest\
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Compound interest is interest earned on both your original principal and on previously accumulated interest.](/content/learn/compound-interest/index.html) [Tax Bracket\
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A tax bracket is a range of income taxed at a specific rate in the U.S.](/content/learn/tax-bracket/index.html) [Capital Gains\
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A capital gain is the profit you earn when you sell an asset for more than you paid.](/content/learn/capital-gains/index.html) [Time Value of Money\
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The time value of money (TVM) is the principle that a dollar today is worth more than a dollar in the future, because today's dollar can be invested to earn returns.](/content/learn/time-value-of-money/index.html)

## Try Ray free

Open source, local-first, and takes five minutes to set up.

$npm install -g ray-finance [View on GitHub](https://github.com/cdinnison/ray-finance)