The Roth IRA is your basic Retirement Account for an individual.  It is named for William Roth and made possible under tax laws.  Different from a traditional IRA, contributions to it are not tax-deferrable and it has fewer withdrawal requirements and restrictions.  With certain stipulations, withdrawals are tax-free in general.  Inside the Roth IRA account, transactions do not generate current tax liabilities.  The best Roth IRAs are managed creatively as the main advantage is found in its tax structure.

Early withdrawal, excess contribution, improper conversion, withdrawal that occur in 5 years or less, and miscellaneous non-qualifying distribution are the five basic ways to incur penalties with the Roth IRA.
Most common would be the penalty for withdrawing early from your Roth IRA account.  These would be funds that you withdraw prior to the time when you reach the age of 59 and one half years old.    The penalty is 10% of all investment gains you have withdrawn.  The penalty for excess contributions is a tax of 6% annually on the excess amount that you contributed.  This penalty is easy to avoid by paying attention to the amounts you contribute in relations to amounts you are allowed, and fixing any problem that might arise before the tax filing deadline.

Improper conversion penalties are more complicated and stem from converting Traditional IRAs into Roth IRA, and involve additional information including; your age, the time frame, and any distribution you take.  To withdraw your investment gains tax and penalty free then your Roth IRA must be funded and kept open for five years at the very least.  To avoid any non-qualified distribution penalty you must know the difference between non-qualified and qualified distributions.  You also must be knowledgeable of any exceptions to the rules.  It is always best if you follow the regulations and rules which govern your Roth IRA to avoid tax liabilities or penalties.