For a Roth IRA, do you also get dividends, or just from mutual funds? In what ways does having a Roth IRA support early retirement exactly? Is it just a good place for emergency cash, or does it actually generate money?
Think of an IRA like a magical tax-free shield that you can put around a limited portion of your investments. You can wrap mutual funds with this IRA shield. Same goes for individual stocks, bonds, FDIC insured savings, or even rental real estate! If an investment pays dividends in a taxable account, it will pay those same dividends in your IRA. The difference is that you don't have to pay tax on the dividends when they're paid to your IRA.
I'm also having a bit of trouble understanding what exactly changes after having the account open for 5 years. I have been googling, but I feel like I'm still missing some big concept.
There are two different five-year rules for a Roth IRA.
This post does a decent job of explaining them.
In a nutshell, the first rule says that your Roth IRA
earnings are only tax-free if you have had a Roth IRA for at least five years when you take your first qualified distribution. So if you start your Roth at age 59 and withdraw your earnings from it at 60, you'll have to pay taxes on the gains, but if you wait until age 64, the gains are tax-free.
The second five-year rule is probably discussed more often here as part of a "Roth pipeline" strategy. This rule says that Roth
conversions (from a Traditional IRA or 401(k)) may be withdrawn penalty-free after five years. This is a common strategy whereby an early retiree would make a traditional->Roth conversion for the living expenses they plan to have five years down the road. After five years, they withdraw the converted amount penalty-free. Search for the "Roth pipeline" for more details about this strategy if you're interested. If you're just starting out, you might want to learn some other stuff first because you can't really put the Roth pipeline into action until five years before you intend to retire.