The Roth IRA has been around for less than 25 years, but it has already become one of the most popular retirement accounts, especially among younger adults who haven't yet hit the peaks of their careers.

It isn't a great fit for everyone, but if any of the following benefits appeal to you, consider adding one to your retirement plan.

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1. Tax-free retirement distributions

You pay taxes on your Roth IRA contributions the year you make them, so you can enjoy tax-free withdrawals in retirement. This is different from traditional IRAs, where your contributions reduce your taxable income for the year, but you pay taxes on your retirement withdrawals.

Paying taxes on your contributions rather than your distributions could be advantageous if you believe you're in the same or a lower tax bracket now than you'll be in once you retire. You'll lose a smaller percentage of your income to the government by paying this year compared to delaying taxes until retirement, when you might be in a higher tax bracket. 

A Roth IRA might be a bad idea if you think you're in a higher tax bracket today than you'll be in once you retire because you'll lose a larger percentage of your income. In this case, a traditional IRA or 401(k) is a better choice. 

2. No required minimum distributions 

Most retirement accounts require you to make mandatory withdrawals, known as required minimum distributions (RMDs), once you turn 70 1/2 (if you reached this age before 2020) or once you turn 72 if you'll reach this age in 2020 or later.

It's the government's way of ensuring it gets its cut of your savings. But since you've already paid taxes on your Roth IRA contributions, you don't have to take RMDs from this account. 

You're still free to withdraw money whenever you need it, but the government won't force you to take it out, so it can continue growing tax-free for as long as you'd like. If you don't use it all before you die, it becomes a tax-free inheritance for your heirs. 

3. Penalty-free withdrawals of contributions

You usually cannot withdraw funds from tax-deferred retirement accounts if you're younger than 59 1/2 without paying a 10% early withdrawal penalty. But Roth IRAs don't have this penalty because you've already paid taxes on your contributions.

You're free to withdraw your Roth IRA contributions at any point, but you cannot withdraw earnings penalty-free until you've had the account for at least five years and are at least 59 1/2.

Just because you are able to withdraw retirement savings at any time doesn't mean you should. Early withdrawals force you to catch up by saving even more money for retirement, which isn't always easy to do. If you do need to make a withdrawal before you turn 59 1/2, pay attention to how much of your portfolio is from contributions and how much is from earnings so you can avoid penalties.

If you think you could benefit from the unique tax advantages the Roth IRA offers, consider stashing some of your retirement savings there. Just make sure you don't exceed the $6,000 annual contribution limit for 2021 ($7,000 for adults 50 or older). If you'd like to set aside extra money for retirement, stash it in a 401(k), health savings account, or other investment account.