A Roth IRA is a special individual retirement account (IRA) where you pay taxes on the money that goes into your account, and then all future withdrawals are tax-exempt. Roth IRAs are better when you think your marginal taxes will be higher in retirement than they are now. A Roth IRA is often an attractive savings vehicle to consider for people who expect their tax rate to be higher during retirement than it is currently. Roth IRAs allow you to pay taxes on the money that goes into your account, and then all future withdrawals are tax-free.
Roth IRA contributions aren't taxable because the contributions you make are usually made with after-tax money and you can't deduct them. The severe penalties for early withdrawals are one of the downsides of contributing to an IRA, but they're not the same for traditional IRAs and Roth IRAs.