Income Limit

• To contribute to a Roth IRA, your adjusted gross income must be less than the amount that the federal government decides each year.
  
  

Investments

• Your money grows tax free inside the account. You can hold a variety of investments in a Roth IRA, including stocks, bonds, mutual funds and certificates of deposit.
  
  

Contributions

• You make Roth IRA contributions using after-tax dollars, so you can't deduct them from your taxes. The government sets a limit on how much money you can contribute to a Roth IRA each year.
  
  

Five Year Period

• Because contributions are made with after-tax dollars, you can withdraw them at any time. However, you must own the account at least five years before you can withdraw any earnings, or you will have to pay income taxes and a 10 percent penalty on them.
  
  

Withdrawals

• You can withdraw money tax free before age 59 1/2 for things such as a first-time home purchase or certain medical expenses, if you meet certain requirements. Otherwise, you may have to pay taxes and a 10 percent penalty.