What To Know When Starting a Roth IRA
Retirement and being able to save for that period in your life is on a lot of people’s minds. In order to comfortably, or even manageable, save for retirement you’ll need to set aside a rather large portion of money; this can seem ominous to a lot of people.
Because of its importance, and because the amount required financially is large, utilizing any tool to
What is a Roth IRA?
One of the most popular forms of saving for retirement is by Roth IRA’s. A Roth IRA is an individual retirement account that will allow someone to set aside after-tax income. This income will then be able to be withdrawn, usually tax-free, once the person has reached 59 and a half years old. There are usually limitations as to how much can be contributed each year to a Roth IRA fund; these limitations can also be seen changing from year to year.
Who is eligible to open a Roth IRA?
While most people will be eligible to open an IRA account, not everyone can. For instance, there are yearly income limitations, which are subject to change each year. Currently, if you make over $203,000 as a couple or $137,000 as an individual, you cannot open a Roth IRA account.
There are also limits in place on how much you can contribute to your account on an annual basis. If you are younger than 50 years old, the limit is $6,000 per year. For those older than 50, contributions up to $7,000 can be made.
Taking these numbers into account, there is a possibility that a Roth IRA may not be the best route for you and you may want to consider other options.
Where should I open my Roth IRA?
When you’ve decided to open a Roth IRA account, the bigger question can be - where do I open it? Banks vary pretty greatly on fees, services, and perks for holding your account with them; because of this, there are certain factors you’ll want to carefully consider when making your decision:
What fees are associated with opening an account?
- What fees are associated with opening an account?
- How much will each trade cost you?
- How does the company you choose to invest their funds? (stocks/bonds)
- How involved do you want to be in making your investment choices? What resources and advisors are available to you to help you make these choices? If you want to be more involved, you’ll probably want to go with a brokerage type firm. If you want less involvement in your investments, you might want to consider a robo-advisor who will make choices for you.
- What is the company’s record for customer service?
- Is the company easily accessible online to monitor your accounts?