Modern finance · 1950s–1990s
1997
The Roth IRA
A new IRA is taxed going in instead of coming out.
The Taxpayer Relief Act of 1997 created the Roth IRA, named for Senator William Roth of Delaware, and it opened in 1998. Contributions are made with taxed money, and qualified withdrawals in retirement are tax-free.
💡 Why it made sense then
Taxing contributions brought revenue in sooner, and savers got a way to lock in today's tax rate.
Ideas it gave us
- 🧭 IRA (traditional and Roth)
An IRA is a US retirement account you open yourself. A traditional IRA may lower your taxes now and is taxed when you withdraw; a Roth IRA is funded with taxed money and qualified withdrawals are tax-free.
Practise with $10,000 in play money
Free. No real money involved.