Roth IRA

• A Roth IRA is an individual retirement account. A Roth IRA allows you to make non-deductible contributions to the account. Contributions may be removed at any time without a penalty. Distributions that include investment earnings cannot be removed until after five years or when you reach age 59 1/2, whichever is later. These IRAs are not connected with an employer, so you may open one and make contributions regardless of where you work.
  
  

Roth Accounts

• A Roth account may refer to a Roth IRA, but often refers to other types of accounts, such as a Roth 401(k) or a 403(b) account that allows Roth contributions. These Roth accounts are employer-sponsored retirement plans. Because of this, they are subject to rules that are different from individual retirement accounts. For the employer-sponsored plans, contributions may be higher than the $5,000 contribution limit for Roth IRAs. Investment options are limited according to how the employer has set up the retirement plan.
  
  

Benefits

• Both types of Roth plans provide similar benefits in terms of tax-free distributions. Both types of accounts provide income tax-free buildup inside the plan. But, a Roth account with an employer provides additional protection from creditors and bankruptcy under the Employee Retirement Income Security Act (ERISA). The benefit of a Roth IRA, however, is that you don't have to be employed by a particular employer to get the benefits of Roth contributions and distributions. You also get the benefit of being able to withdraw your contribution amounts prior to retirement, whereas Roth accounts normally do not allow this option because they are regulated by ERISA laws that prohibit withdrawals prior to age 59 1/2.
  
  

Considerations

• Roth accounts that are part of an employer retirement plan, such as Roth 401(k) plans, are subject to required minimum distributions. This isn't true for Roth IRAs. You must start taking distributions from your Roth 401(k) when you reach age 70 1/2, just like you would have to do if you participated in a traditional 401(k) plan.