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What is a Roth IRA?

Roth is a type of individual retirement account (IRA). It allows you to invest in stocks, bonds, mutual funds, certificates of deposit, ETFs, index funds, etc. using the money you’ve already paid income taxes on.

With a Roth IRA, your earnings and dividends grow tax-free. This means you don’t pay income taxes on the money you take out of your Roth IRA after age 59 ½. This is the age you need to be to access this money without penalty.

Roth IRAs (and Traditional IRAs) have yearly contribution limits of $5,500 ($6,500 for people over the age of 50).

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