Among individual retirement accounts, the Roth IRA stands out because of its special tax advantages. Instead of providing tax breaks at the time of deposit, Roth IRAs allow account holders to receive benefits completely tax free after retirement.
Roth IRAs were created to give working people a greater incentive to save for their post-retirement years. Opening up a Roth IRA is easy and convenient even for those who have little to no previous experience with investment and financial planning.

Determining Eligibility
There are income limits that determine both eligibility for a Roth IRA and the amounts that can be contributed by those who are eligible. Those who file individual tax returns are only allowed to make the maximum allowable contribution if their earned income is $107,000 or less, while married couples filing jointly face a $169,000 limit. The maximum contributions to Roth IRAs are $5,000 per year for those under the age of 50 and $6,000 per year for those 50 and older. For those whose incomes fall between $107,001 and $122,000 annually for individuals and $169,001 and $179,000 for couples, Roth IRA contributions are still allowable on a gradually decreasing scale. One stipulation is that all money contributed to this type of individual retirement account must come from income earned through employment, i.e. wages, salary, employee profit sharing, etc.
Types of Providers
Roth IRAs are offered though banks and credit unions, brokers, and mutual fund companies.
IRAs opened through banks or credit unions usually have no fees or minimum deposit requirements. On the other hand, the return on investment they can offer is limited by the fact that banks generally put the Roth IRA funds into certificates of deposit (CDs) or money market accounts, which do not have the potential for big profits (or for that matter, big losses) that are found with investments in the stock market.
Brokerage firms will allow individuals to put their money into individual stocks, which gives this kind of investment a sort of boom-or-bust feel. But for anyone confident in their ability to pick winners, this can be an attractive option. Brokerage firms generally don’t have minimum deposit requirements, but they do charge relatively high fees to cover account management costs.
Mutual fund companies give Roth IRA holders a chance to choose from an assortment of mutual stock funds that spread investment across a number of stocks. This tends to reduce risk but it also may not deliver the high end rewards of individual stocks well chosen. Minimum initial deposit requirements of $1,000 or more are common with mutual funds, and the fees charged will vary based on how much is kept in the account.
The final choice of a provider is entirely up to the individual, based on what kind of return they hope to get on their investments; how much risk they are willing to assume; how much money they are willing to deposit in their account in the beginning; and how much they are willing to pay for fees on a monthly or yearly basis.
Opening the Account
To open a Roth IRA at a bank or credit union, it is simply a matter of going in, filling out the paperwork, and getting the account started once eligibility has been established. A Google search combined with personal investigation can turn up discount brokerage firms and mutual fund companies offering good deals and favorable terms. Once a provider is chosen, an application form can be filled out online and submitted by email. Any required upfront fees and deposits should also be included with the application, which will be approved if income requirements are met. Account holders can arrange to have money deducted from their bank accounts electronically and deposited into their Roth IRA investments automatically if they so choose.
After account holders have chosen their investments, the only thing left to do is sit back and watch as their account continues to grow over the years, knowing that they will eventually get every penny of the money that accumulates once they reach the age of retirement.
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