How To Start a Roth IRA

Lately everyone seems to be buzzing about setting up Roth IRA’s and how they can set you up for a financially secure future. You may be thinking to yourself “I am too young to open an account” or “I don’t have enough money to start an account right now”. Keep it here and you will learn how to start a Roth IRA, and we will clear up any questions you might have.

What is a Roth IRA

A Roth IRA is a retirement investment account that grows tax free, yes you read correctly, tax free. These individual retirement accounts allow a person to set aside after tax income up to a specified amount each year. Roth IRA’s give you flexibility in regards to how and where you wish to invest your money; this is an excellent, tax efficient way, to invest in your future.

Roth IRA’s are an excellent form of retirement investment Think of them as a traditional savings account; they just have a few more rules you need to abide by.

How to Start a Roth IRA

Surprisingly its a pretty easy process. Just follow these simple steps on how to start a Roth IRA.

Verify income eligibility, its a pretty pain free process, this should help.
Select a Provider (more on that in a second)
Figure out how much you can afford to invest each year, the maximum is 5,500 if you are under 50.
Write down a few goals, you’d be surprised how much writing down your goals will help you achieve them
Start investing
Teach your friends and family how to start a Roth IRA

Another questions people ask me all the time is how much money they need when starting an IRA. The good news is, there’s usually no specific limit.

If there is, it’s low & broker-specific – i.e. different providers of IRAs have different requirements. But usually it’s like 50 bucks or 500 bucks at the most (kinda rare).

At the end of the day, starting a retirement account is pretty easy.

Where to Open your Roth IRA

We did the heavy lifting for you; we researched a number of top account providers and recommend one of the following
Scottrade-For the budget investor, you only need 250 dollars to start an account.

TD Ameritrade- Great for customer service but you will need to fork over 2500 to start an account with this broker.
E-trade- A great platform for serious investors, only requires 500 to start.

When Can I Withdraw

One of the neat things about a Roth IRA is that you can begin to withdraw contributions whenever you want; however, you need to be careful in order to avoid being penalized. You may withdraw “contributions” anytime penalty free but In order to make “qualified distributions” you must;

Be at least 59 ½ years old
Been contributing to your account for five years or more

Just to clarify; you may take out the money you put in at any time but in order to distribute (withdraw) the earnings (money your account makes) you have to abide by the rules mentioned above.

Whats the difference between a Roth IRA and an IRA?

There are a couple main difference between Roth IRA’s and traditional IRA’s you need to think about when considering where to start a Roth IRA. With a traditional IRA you pay taxes on the back end, with a ROTH IRA, it is the complete opposite.

Another distinguishing difference between the two is who qualifies for each account. Anyone can contribute to an IRA where as there are income limits and qualifications for a ROTH IRA. It is important to emphasize that with both accounts your money will grow tax free over time.

Well you came to us wondering How to open a Roth IRA, and now you know where to start a Roth IRA, When you can withdraw from your account, and what the difference is between a Roth IRA and a traditional IRA. Now that all of your retirement investment questions have been answered, get to it.

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