Retirement planning is a unique journey for everyone. There are several different strategies, accounts, and rules that each person follows based on their situation. However, I don't think it's a stretch to say that people want to make more money and pay fewer taxes on that wealth. I mean, who likes paying taxes?

Don't worry -- I'm not advocating tax evasion. Instead, I'm hyping up my favorite retirement account: the Roth IRA. Here are the basics of a Roth IRA and why it's a must-have tool if you want to retire a millionaire.

It is a tool so powerful the government only lets you use it so much

The Roth IRA is a relatively new type of retirement account. The individual retirement account, or IRA, was created in the late 1990s as part of the Taxpayer Relief Act of 1997. This spawned the traditional IRA and Roth IRA types. IRAs are a supplemental investment vehicle to an employer plan such as a 401(k).

Investors pay deferred taxes on a traditional IRA, meaning their contributions reduce their taxes for that year, and they pay taxes on their withdrawals in retirement. A Roth IRA is the opposite: You contribute taxed money but don't pay any taxes on the contributions or gains when you start withdrawing money in retirement.

Suppose you invest $7,000 annually in a Roth IRA from age 30 to age 65, and your portfolio returns an average of 8% annually. You will end up with a portfolio worth $1.3 million. Of that, $252,000 are your original contributions; the rest is the result of compounded investment returns. That's over $1 million you're making tax-free!

It's such a great deal that the government limits how much you can contribute each year ($7,000 for those under 50 years old) and how much your annual income can be to qualify for using a Roth IRA. In other words, the government wants to block the wealthy from using this account.

The rules that high-earners need to know

For 2024, the government will start limiting people's Roth IRA contributions once their taxable income reaches $146,000 for individuals and $230,000 for married households. That means high earners cannot contribute to a Roth IRA like those making less money can.

The good news is there are ways around this rule. Higher earners can still fund a traditional IRA with the same contribution limit but no income ceiling. Then, convert the IRA to a Roth. This is called a backdoor Roth IRA. The catch is that you'll owe taxes on the converted amount for the tax year you make the conversion. So those converting a large sum should be ready for a hefty tax bill.

Once converted and taxes are paid, the money grows tax-free inside the Roth IRA. Then there's another backdoor Roth, which involves converting your employer's retirement 401(k) plan or alternative to a Roth IRA. Either way, consult a tax professional to ensure you understand all the steps and tax implications before you make a move.

Don't wait! Get started

Don't procrastinate opening one if you want to use a Roth IRA. Contribution limits reset every tax year, meaning you can't make up the years you skip. Even contributing small amounts is better than nothing. Compounding does its best work the longer it has to work its magic, so putting off contributions by even a few years can mean thousands of dollars less in retirement.

Using a Roth IRA to grow your wealth could save you thousands of dollars in taxes over your lifetime. It's a rare opportunity to pay less taxes while making more money. Don't hesitate to learn more about Roth IRAs and consider utilizing one in your retirement planning.