How to Start a Roth IRA

You can start Roth IRA and start to invest for retirement at any major financial institution such as a bank or a broker. But first, who can open a Roth IRA? What do you need and what are the requirements?

Basically you need 2 things in order to open a Roth IRA, these are “earned income” and you need to meet the income requirements. If you are not sure if you fit these categories here are a few links to visit

Roth IRA Eligibility

Roth IRA Income Limits

Picking a Financial Institution

Once you know that you are eligible you must open up an account at one of the major financial institutions. Many of the major Banks have self directed IRA plans, so the first place you can look at are the large banking giants such as Wells Fargo and Bank of America.

In addition to those the large brokers also offer a similar plan. Places like

• Vanguard
• Fidelity
• Scottrade
• Etrade
• Sharebuilder
• TRowePrice
• Zecco
• Tradeking

All have some sort of Roth IRA plans for you to choose from. There are definitely a lot of places to shop around at so don’t just get into the first place you see. Shop around a bit, it is your financial future after all.

How to pick an institution

There is no shortage of places that allow you to start Roth IRA, but how can you choose between them? Simply you can visit the website of each major financial institution or simply call them to get more information. Things to compare are.

1. Fees (Start up fees, Annual Maintenance fees, Broker fees, etc.)

Probably the most important things to consider are the actual fees that come with the plan. Over the long term even small fees can add up so find a plan that will not constantly eat away at your retirement money.

2. Minimum Balance

There are no tax laws when it comes to the minimum balance in your IRA, but each company will have their own rules and regulations. The minimum balance is something that you will have to take into consideration especially if you only have $1,000 or less to invest into your plan.

3. Investment Options

What do you want to invest into? Each plan may have a limit on what you can actually put your retirement money into. Depending on the plan you might be able to invest into, Mutual funds, stocks, bonds, even real estate. So make sure your plan allows you to invest in your ideal investment vehicle.

4. Does it Allow Automatic Contributions?

A third option that is not entirely necessary, but it is always nice is if the plan allows automatic contributions. This becomes more and more important the more forgetful you are or the more you simply want to have the money invested into it without having to worry.

Open a Roth IRA

Now that you have a general idea of where you want to open up a Roth IRA the next step is to actually do it. Most Financial institutions have a place where you can just start Roth IRA online and some may even allow you to deposit money into the account directly over the internet.

If the institution you have chosen is smaller however or if you just like the warm comfort that comes with talking to people face to face you can always walk down to the institution, fill out an application and write a check.

Either way it shouldn’t be extremely difficult or complicated to set up a Roth IRA.

Keep a record

After you start Roth IRA it is a good idea to keep all of your IRA information in a separate folder. This way you are not looking all over the house whenever you need it for taxes. Just some words of wisdom from a very disorganized person.

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