Who Created the Roth IRA?

The introduction of the Roth individual retirement account (Roth IRA) in 1997 presented Americans with a bold new way to save for retirement. Rather than getting an up-front tax benefit by writing off their contributions to a qualified retirement plan, workers could invest after-tax dollars and withdraw them tax-free in retirement. As of 2020, 26.3 million households—slightly more than 20% of the U.S. population—owned a Roth IRA, according to the Investment Company Institute.

Who was William Roth, the man whose name is indelibly attached to these accounts? While the retirement vehicle that he helped create is widely known, the conservative legislator kept a relatively low profile during his three-and-a-half decades in Washington, D.C.

As it turns out, the Republican senator had an influence well beyond the Roth IRA. He was a relentless fighter for tax cuts that he thought would encourage entrepreneurship and grow the economy. Roth also had an impact on foreign affairs, pushing for North Atlantic Treaty Organization (NATO) expansion into Eastern Europe—a position with new salience given the Russian invasion of Ukraine on Feb. 24, 2022.

From Montana to Washington, D.C.

William Victor Roth Jr. was born in 1921 to a working-class family who eventually settled in Helena, Mont. When he was young, his mother would regularly take him to the capital to hear state legislators debate various bills. Roth would later attribute his interest in politics to those formative experiences.

After graduating from the University of Oregon, the future senator became an Army intelligence officer during World War II, earning a Bronze Star in the process. He continued his education after the war, earning business and law degrees from Harvard University.

Roth joined the legal team at a Wilmington, Del.–based chemical company, later becoming its general counsel. He would eventually turn his sights to the political arena, winning a bid to the U.S. House of Representatives in 1966.

Four years later, the Republican ran for and won a U.S. Senate seat representing his adopted state, which he held for another 30 years. In the process, he became what some consider the longest holder of statewide office in Delaware history.

Throughout that 34-year run, Roth never lost his folksy campaigning style. His signature campaign tactic was traveling the state with his St. Bernard, fielding questions from voters—and sometimes getting visits from kids who were more interested in the dog.

A Conservative Stalwart

During his long tenure in the Senate, Roth earned a reputation as a fierce proponent of lower taxes and limited government. In 1978, he and Rep. Jack Kemp (R-N.Y.) pushed for an across-the-board tax cut on personal income, arguing that it would incentivize productivity and investments, but they were unsuccessful. However, by the time Ronald Reagan won the Republican presidential nomination in 1980, the political tides were turning and Roth played an important role in drafting the party’s economic platform, cementing tax reduction as a key issue in the campaign.

Roth was just as dogged in his fight against government waste. As the chair of the Senate Governmental Affairs Committee, he famously called attention to the Navy’s purchase of a $640 toilet seat and a $9,600 wrench bought by the Department of Defense.

The Republican rose to chairman of the Senate Finance Committee in 1995, a position he used to rail against what he saw as the overreach of the Internal Revenue Service (IRS). Under his leadership, the committee held a series of hearings that highlighted everything from unduly aggressive tax collection efforts to cases in which spouses were held responsible for their partner’s tax crimes. Some of these examples were included in The Power to Destroy, a book he wrote in 1999 about the IRS.

Despite his strong fiscal conservatism, Roth managed to form a personal friendship with the junior and Democratic senator from Delaware, Joseph Biden, with whom Roth served for nearly three decades. Biden, now U.S. president, once described Roth as “the person I trusted most in my public life.”

The Birth of the Roth IRA

As early as 1989, Roth and Sen. Bob Packwood (R-Ore.) introduced a new type of individual retirement account (IRA) known as the “IRA Plus.” Rather than offering a tax break on contributions, the account would allow tax-free withdrawals in retirement.

That feature meant that Roth and Packwood—who simultaneously advocated for lower capital gains taxes—could claim that their plan was budget-neutral, at least in the short term. Because IRA Plus owners invested after-tax dollars, the government would recover some IRA money that otherwise would be tax-deductible. Critics argued that the new plan represented a budget gimmick, with the U.S. Treasury ultimately losing revenue when savers eventually pulled money out, tax-free, when they left the workforce.

The plan failed to gain enough support at the time, but within a few years, the idea received new life. With Republicans controlling both houses of Congress, the revised IRA was included in the Taxpayer Relief Act of 1997, which garnered then-President Bill Clinton’s support.

Two years earlier, Packwood had resigned from Congress amid accusations of sexual misconduct, leaving Roth as the main architect of the IRA Plus in the Senate. By the time the 1997 bill was passed, the accounts were renamed Roth IRAs in his honor.

Foray Into Foreign Affairs

While focused largely on domestic affairs during his long Senate tenure, Roth became a key proponent of expanding NATO into Eastern Europe in the late 1990s.

With President Clinton’s support, the Senate convened a NATO observer group to advocate for the inclusion of Poland, the Czech Republic, and Hungary into the alliance. Clinton named Roth the chair of that observer body, a move seen by some as a show of bipartisanship.

Though the enlargement of NATO was popular at the time—a 1997 Pew poll found 61% of Americans in favor—critics argued that the inclusion of former Warsaw Pact states could antagonize Russia. Since then, NATO has spread even farther east, with Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia, and Slovenia joining in 2004, Albania and Croatia in 2009, Montenegro in 2017, and the Republic of North Macedonia in 2020.

NATO membership has turned into a key factor in recent Ukraine–Russia tensions, with Ukrainian President Volodymyr Zelenskyy having expressed interest in joining the alliance. Russian President Vladimir Putin, for his part, said that a guarantee that Ukraine would never join NATO was a condition for the removal of more than 190,000 Russian troops stationed just across the Ukrainian border. And that was before the invasion on Feb. 24, 2022.

After Roth lost his Senate re-election bid in 2000, he continued to focus on Eastern Europe’s fledgling democracies. He briefly served as co-chair of the U.S.-E.U.-Slovakia Commission, a privately funded group aimed at helping Slovakia address economic and security issues. Roth died in 2003 of heart failure. He was 82 years old.

The Bottom Line

William Roth continues to be known primarily for the type of retirement account named in his honor, but he had a remarkably long Senate career that saw a number of notable achievements. They include bringing tax cuts and government waste front and center in the public consciousness and advocating for the expansion of NATO in Eastern Europe.