Which of the following best describes a Roth IRA?

A Roth IRA is best described as an account that offers tax-free qualified withdrawals. This is a key feature that distinguishes it from other types of retirement accounts. Contributions to a Roth IRA are made with after-tax dollars, meaning that while you do not get a tax deduction when you contribute, your money grows tax-free, and you can make qualified withdrawals without having to pay taxes on those amounts.

Qualified withdrawals typically include funds taken out after age 59½, provided the account has been open for at least five years. This tax-free aspect of Roth IRAs is highly attractive as it allows investors to have potentially significant tax savings in retirement, especially if their tax bracket is higher during retirement than when they contributed to the account.

The other choices do not accurately reflect the characteristics of a Roth IRA. Contributions are not tax-deductible, there is no mandatory contribution requirement, and while contributions are taxed when made, the primary point of interest is the tax-free nature of qualified withdrawals, which is not captured in the option related to immediate taxation of contributions.