A Roth IRA is a type of IRA (individual retirement agreement) which allows individuals to receive certain tax benefits on retirement savings. As opposed to traditional IRAs, contributions to Roth IRAs are not tax deductible, but you will be able withdraw contributions from the account without paying taxes. This page is an introduction on how to open a Roth IRA.

The content in this page is not a substitute for professional financial advice. Please contact your financial adviser before using the information presented here.

A Roth IRA is a type of IRA (individual retirement agreement) which allows individuals to receive certain tax benefits on retirement savings. As opposed to traditional IRAs, contributions to Roth IRAs are not tax deductible, but you will be able withdraw contributions from the account without paying taxes. This page is an introduction on how to open a Roth IRA.

The content in this page is not a substitute for professional financial advice. Please contact your financial adviser before using the information presented here.

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(Creative Commons photo by benn)

• Roth IRAs are considered a good option for people who think their income will be higher in retirement, because you don't have to pay taxes when withdrawing contributions from the account, no matter when you withdraw it. You will, however, have to pay taxes on earnings in the account if you withdraw money before a certain age.

• To open a Roth IRA and to make contributions to it, keep in mind the following:

1. As of 2010, the income and tax filing status limitations for Roth IRA holders have been eliminated. This means if you make more than $100,000 and, if married, file your taxes separately, you can still take advantage of the flexibility and tax advantages of the Roth.
2. You can only contribute a certain amount each year to all of your IRAs. The limit for 2009 is $5,000 in contributions; $6,000 if you are 50 years of age or older.
3. IRAs can only be funded with earned income. You cannot fund a Roth with investment income.
4. You can contribute to an IRA until the tax filing deadline for that year, typically on or about April 15 of the following year.

• A Roth IRA (like any IRA) can be opened at a financial institution such as a bank, mutual funds company and brokerage.

1. Some banks charge a fee to open an IRA.
2. While a fee to open one might be acceptable to you, you should avoid any institution that will charge a monthly fee for the account, as this will add up during the many years to come and will deduct from your IRA savings.
3. If you open an account at a mutual fund company you can spread your risks across different investments.
4. You can also open a Roth IRA at a brokerage firm. At a brokerage firm you can choose your investments.

• Use this guide as a starting point for your research. How you decide to save for your retirement will have a significant impact on your life after retirement.

1. Research investment strategies as well as details of IRA restrictions and regulations.
2. While you should take steps to familiarize yourself with a Roth IRAs and investments in general, you should seek help of a financial adviser before making a final decision.

• To open a Roth IRA, research regulations, restrictions and financial institutions. Consult a financial adviser for additional help before opening the account.

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• Introduction
• Step 1: Requirements and Restrictions
• Step 2: Where to Open a Roth IRA
• Step 3: Additional Research
• Conclusion