How to Open a Roth IRA
- 1). Determine if you qualify for a Roth IRA. Roth IRAs are fairly simple because income is the only factor to consider. For 2008, the top income is $101,000 for single filers and $159,000 for joint filers. Some exceptions and partial contributions can be made if you are slightly over these salary limits.
- 2). Determine which investment management company in which you wish to do business. Many companies are available, such as Vanguard, Fidelity, Charles Schwab, etc.
- 3). Determine how you wish to enroll in a Roth IRA: via the web, over the telephone with a customer service representative, or regular postal mail? Since you are likely new to investing, the most efficient and reassuring method would be to call the 800 number to speak to a real person to guide you through the entire process.
- 4). Enroll in the Roth IRA management company you have chosen based upon your needs, goals, and costs you found acceptable after performing your research.
- 5). Complete any paperwork that is required, along with the amount of funds you intend to invest and mail to the investment manager. For 2008, the maximum available contribution is $5,000. Most Roth IRAs can also be opened online without any paper transfer, which would require a wire or ACH money transfer via the web.
- 6). Determine what type of companies or assets you want to buy as an investment. This can be mutual funds, individual stocks, ETFs, bonds, CDs, Money Markets, or even Real Estate. If you are new to investing or do not feel comfortable making your own investments, consider an index fund that contains a collection of stocks. For example, the S&P 500 Index has a collection of 500 stocks that trade under the name Spyders (ticker symbol: SPY) as an ETF.
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Sit back and watch your investments grow tax free over the course of your lifetime.
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