Which plan allows employees to take advantage of tax benefits in retirement after paying taxes on contributions?

The Roth IRA is the plan that allows employees to take advantage of tax benefits in retirement after paying taxes on contributions. Contributions to a Roth IRA are made with after-tax dollars, meaning that individuals do not receive a tax deduction when they contribute. However, the primary advantage of a Roth IRA comes during the withdrawal phase. Once the account holder reaches the required age and satisfies the conditions, qualified withdrawals—including both contributions and earnings—can be taken tax-free. This feature makes the Roth IRA particularly appealing for those who expect to be in a higher tax bracket in retirement, as they can benefit from tax-free growth and tax-free withdrawals.

In contrast, the other plans listed operate differently in terms of taxation. Contributions to a Traditional IRA, for instance, may be tax-deductible, but withdrawals are taxed as ordinary income in retirement. Similarly, both 401(k) and 403(b) plans allow pre-tax contributions, which defer taxes until withdrawals are made in retirement, meaning that taxes are owed at that future time. Thus, while these accounts offer advantages, they do not provide the same tax-free withdrawal benefits that characterize a Roth IRA.