Understanding the key differences can help you choose the right account type for your financial goals.
Roth IRA accounts
Contributions are made with after-tax dollars, but qualified withdrawals in retirement are completely tax-free, including all investment growth.
There are contribution limits of $7,000 per year ($8,000 if you're 50 or older) for 2025.
There are income limits that may reduce or eliminate your ability to contribute directly to a Roth IRA.
Original contributions can be withdrawn at any time without penalties, but earnings withdrawn before age 59½ may be subject to taxes and penalties unless you qualify for an exception.
Standard investment accounts
No upfront tax advantages. You'll pay taxes on dividends, interest, and capital gains.
There are no contribution limits, you can invest any amount at any time.
Available to everyone regardless of income level.
Access your money anytime without age-based penalties.