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Opening a Roth IRA

A look at the world of Roth IRA limits and more investment details about these retirement plans.

This article will go about the process of opening a Roth IRA.  Hopefully by the end of this, you’ll have a good idea as to what you’ll need to do.

The Roth IRA is what is known as an Independent Retirement Account. Of course this is not the first IRA in the United States but it differs in some basic aspects.  It is named for the person who sponsored the bill that gave birth to it.  As is customary, the law backing the IRA and therefore the vehicle itself was named after Senator V. Roth.

IRAs are savings vehicles that are regulated by law. They provide a means whereby taxpayers could save for retirement. However, what makes the Roth IRA different and so much talked about is the fact that unlike other IRAs, taxpayers are able to subject to certain eligibility criterion, make a contribution from their compensation income into the Roth IRA account. The saving is which they will later withdraw from this account will however be tax free.

There are some steps you have to take when opening a Roth IRA.

  1. Take care of the basics: This is a major decision so you are advised to think it through carefully before acting. Again, make sure that you have sufficient funds not just for this but for other necessities. Ensure that you have freed yourself of any credit card debt as those are the most cumbersome debts you can have.
  2. Selection of discount brokerage firm: This is where you will need to do some research work about choosing where you’ll be opening a Roth IRA. You have a choice to make between the firms that operate offline and those who do so mainly online. You have to understand that even those who operate primarily offline have online sites. Again, they offer basically the same thing so it boils down to issues like their fees and not whether they are online or not.
    Making the choice of a broker will not be very easy but you can adhere to the following guidelines in making the choice of broker when it comes to opening a Roth IRA.
    1. Requisite minimum investment, if any needed
    2. Minimum sum, if any for subsequent contributions
    3. The fees, if any attached to the account
    4. Whether it is possible to make contributions via banks draft automatically
    I will be giving you a list of possible discount brokers that you might want to look at for opening a Roth IRA account.
    1. Firstrade
      Roth-IRA fee: None
      Charge per trade: $6.95
      Minimum Initial Investment: None necessary
    2. Sharebuilder
      Roth-IRA fee: None
      Charge per trade: Varies
      Minimum Initial Investment: None necessary
    3. Zecco
      Roth-IRA fee: $30 Annual Fee
      Charge per trade: $0.00-$4.50
      Minimum Initial Investment: None necessary
  1. Get your application filled out: You will have to log onto their site to fill out the forms you need. There are certain pieces of information that you’ll need to have ready and they include the following:
    • Your Social Security number
    • Your bank account number
    • Your bank account routing number
    • Your current employment information
    • Your initial investment amount
  • Make the initial investment: At this stage, you are almost there. You have to make your initial payment to open your Roth IRA.
  • Begin your investment. Now that you have completed the process of opening a Roth IRA, you can start making strides with your investment.