How to Open a Roth IRA
Wondering how to open a Roth IRA? The process is simple , once you have established your eligibility and made the initial selection of custodian. While there is no age limit on opening a Roth, there are income level limits . For a single person ,the limit is $120,000 annually in income. Contributions to the Roth are capped at $5000 per year, with a catch-up exception for individuals 50 years old or older , who are allowed an extra annual $1000 contribution. One benefit of the Roth IRA is that you can continue contributing to the account indefinitely, as opposed to traditional IRAs that mandate contributions end and mandatory distribution to start at age 70 ½. The choice of custodian is very important. The custodian holds and manages the IRA for the owner, and there are a variety of possible custodians you can work with . Banks can hold the account, but might not have available the investment options and continuing education the investor needs . Brokerage houses usually specialize in a package of stocks and mutual funds as investment vehicles. Self Directed IRA custodians offer traditional investments such as stocks, bonds and mutual funds, and some non-traditional vehicles including precious metals and real estate. Look at all the variables to determine which custodian most comfortably fits your investment style, and which will provide the most reliable service. All custodians charge fees for their services, so familiarize yourself with your selected custodian’s fee schedule. Once you’ve done your homework establishing your eligibility and decided on the custodian, the biggest challenges on how to open a Roth IRA are behind you. The new custodian provides you with forms to fill out and return.This paperwork is processed and you are issued an account number, and are able to fund your Roth IRA, either by check or by electronic deposit. You then inform the custodian on your investment choices. The road to retirement just got smoother now that you know how to open a Roth IRA.