Named after Senator William V. Roth, Jr., the Roth IRA, or individual retirement arrangements or individual retirement accounts as they are commonly called, are fast emerging as popular saving schemes. The advantage of this scheme is that the tax payers, on meeting a certain eligibility criteria, can contribute some amount of their compensation income into the Roth IRA account, and the savings that grow in it will be tax-free.

One thing to be kept in mind is that the tax benefits accrue only when an individual withdraws money from the account. Withdrawals are subject to certain Limits in order to be tax-free. First and foremost, a person who has either reached fifty-nine and a half years of age or has suffered some sort of disability can make the withdrawals after a period of five years. The withdrawn money will also be tax-free if the person needs it to buy, build or rebuild his first home.

Also, regarding contributions, there are certain set Limits. This means that in one financial year, a person