<prompt> Human: So I am explaining IRA to my girlfriend and she wants to know why a Roth IRA is tax free. I really dont know the answer, she said it sounds weird that they dont tax you on your Roth IRA. I agree its weird as well, but I just figured it is what it is and Ill take it tax free no complaints. Is there a reason or explanation to this as to why its tax free?  <response>: The US has 2 different taxing arrangements for retirement: Roth and Traditional.Traditional accounts: The money goes in untaxed i.e., you get a tax deduction, it grows untaxed, the distributions are then taxed. There is also the possibility of getting a tax credit.Roth accounts: the money is put in after tax, it grows untaxed, the distributions are untaxed. However, you cannot contribute if you exceed a certain income level.There are 2 different account types for retirement: IRA and 401k. The primary difference is that the 401k has larger limits, employers may or may not contribute. If you have a 401k, the tax treatment rules for IRAs change. Traditional IRAs are only deductible upto a certain level. There are some additional complexities, tax treatments, and account types, but those are uncommonThe reason why: Congress wants to help people save for retirement and so created all of these various account types. Why did Congress create them take your pick of the following: To get campaign contributions from companies that would manage this complexity. Their constituents wanted good options. To reduce future burden on Social Security. 