One of the basic obstacles to saving for retirement is the simple act of opening an investment account, as is the Roth IRA option. Starting a Roth IRA is as easy as opening a checking account, folks! This is the perfect way to save money in retirement. How can I open a Roth IRA?
Roth IRAs are one of the best ways to save for retirement. Although there is no upfront tax credit, you get tax-free income in retirement – even on earnings that have accumulated over the years. There are also no required minimum distributions for the Roth IRA during your lifetime. This means you can let your money grow until you need it, or even leave tax-free income to beneficiaries.
Decide if the Roth IRA is right for you
The first thing you need to do is find out if your Roth account is the best savings option for your needs. Before you follow the IRA path, make sure you make the most of your employer’s contribution to your 401 (k) or other workplace retirement plan – that is, if you’re lucky you got it in your compensation package.
Check your permissions
A Roth IRA may not be an option if you exceed your income limits. In 2020, eligibility begins to expire for applicants as a sole proprietor or a household who earns over USD 124,000 (USD 122,000 in 2019); once you reach $ 139,000 in profit ($ 137,000 in 2019), you can no longer contribute. For joint entities for submission of applications for 2020. The limit value is USD 206,000, with withdrawals above USD 196,000 (USD 203,000 and USD 193,000 for 2019). Please note that the deadline for contributing to the Roth IRA for 2019 is April 15, 2020; for 2020, it is 15 April 2021.
Complete the documentation
In fact, opening an account is quite easy, and the vast majority of providers allow you to do it online. Of course, you need to provide some information to verify your identity.
Here’s what you should have on hand to speed up the process:
- Your social security number
- Driving license or other photo ID
- The name and address of your employer
- Your bank account number and route number to transfer cash to the IRA
- After completing the transition, account information for an existing IRA or 401 (k) account
- The name and social security number of the beneficiary of your account
Choose your investments
Unless you opt for a robo adviser or other asset management service, you’ll have to choose individual investments that will go to your Roth account. The IRS allows for a fairly wide range of vehicles, including shares, bonds, mutual funds, ETFs and certificates of deposit. You can also opt for funds on a target date that offer a pre-set combination of individual equity and bond funds based on your investment horizon.
Choosing is a pleasant luxury, but it requires more homework when it comes to choosing a Roth IRA provider. Find out which plan features are most important to you and which you can skip. Do you really set up an account? This is the easiest part.