Vine
👑
Money systems

Lesson 55 · Written for kid, teen, and little

Roth IRA — the cheat code

Money you put in a Roth grows tax-free — starting early is a huge deal.

The idea

A Roth IRA is a special U.S. retirement account funded with after-tax money. Earnings can be withdrawn tax-free when the withdrawal meets the rules: generally, you must meet the five-tax-year rule and be at least 59½, with some exceptions. Kids and teens need eligible earned income to contribute, and an adult usually helps open the account. Contribution limits apply. Starting earlier gives investments more time, but returns are not guaranteed. This lesson is educational — not financial advice.

A

Words to know

4

Roth IRA

A retirement account funded with after-tax money. Growth is not taxed each year inside the account, and qualified withdrawals can be tax-free. Rules about contributions and withdrawals still apply.

After-tax

Money you have already paid income tax on before contributing. The $255 that actually landed in your account from a $300 paycheck is after-tax.

Tax-free growth

Qualified Roth IRA withdrawals are tax-free. Usually this means meeting the five-tax-year rule and being at least 59½; other qualifying situations exist. Early withdrawals of earnings may trigger tax and an additional tax.

Earned income

Money from a real job (W-2 or self-employed) — needed to contribute to a Roth. Birthday money and allowance do not count.

Try it — no accountDrag and watch

$50 a month into a Roth, starting now. Drag the years — see what tax-free looks like.

In the Roth

$15,941

Aim for this or more

$80,000

$50 per month. Assume a 7% annual rate after inflation, divided by 12 for monthly compounding, with payments at the start of each month. This is a projection, not a promise. Qualified Roth withdrawals can be tax-free; account rules apply.

Years growing

15 yrs

Push years past 30 to see the compounding hockey stick.

Drag a slider to see the shape.

In the full lesson

  1. 1Sort into groups
  2. 2Drag and watch
  3. 3Make the call

Vine has 107 lessons like this one, each written three ways so a 7-year-old and a 17-year-old both get a version that fits.

Free to use

The practice portfolio is open.

Start practicing

More in Money systems