What does "Roth IRA" stand for?

The term "Roth IRA" stands for "Roth Individual Retirement Account." This type of retirement account is named after Senator William Roth, who was instrumental in its creation as part of the Taxpayer Relief Act of 1997. A Roth IRA allows individuals to contribute after-tax income, meaning that withdrawals during retirement are generally tax-free, provided certain conditions are met. This is a significant advantage for many investors, as it can lead to substantial tax savings.

The other choices do not accurately represent what a Roth IRA stands for. The term 'Investment,' for instance, is misleading in the context of the account’s designation. Similarly, 'Internal Revenue Account' and 'Individual Retirement Allocation' do not capture the specific legal and tax implications associated with Roth IRAs. By understanding the correct terminology surrounding retirement accounts, individuals can make more informed decisions regarding their retirement planning.