Which of the following statements is true regarding a Roth IRA?

A Roth IRA, or Roth Individual Retirement Account, is designed to provide individuals with a way to save for retirement while enjoying certain tax benefits. The key feature that makes the statement correct is that contributions to a Roth IRA are not tax-deductible when made; however, the distributions, or withdrawals, taken during retirement are entirely tax-free, provided certain conditions are met. This tax treatment allows individuals to grow their investments without worrying about future taxes on withdrawals, making it an appealing option for retirement savings.

This differentiates the Roth IRA from other retirement accounts. For example, traditional IRAs allow for tax-deductible contributions, but withdrawals are taxed as ordinary income in retirement. Additionally, the eligibility for contributing to a Roth IRA is based on income limits that apply to high-income earners, but it is not exclusively available only to them—many individuals can still contribute within certain income parameter thresholds.

Thus, the true and notable aspect of a Roth IRA is that contributions do not come with an upfront tax break, but the benefit lies in the tax-free nature of the distributions later on.