A Roth IRA is an individual retirement account that allows you to invest after-tax dollars that grow tax-free and can be withdrawn at age 59 and ½. Each year, the maximum contribution permitted in a Roth IRA account is $6,000. However, for investors age 50 and above, the maximum contribution allowed increases to $7,000.
The steps to begin investing in a Roth IRA consists of the following:
- Make sure you’re eligible – anyone who has earned income during the tax year is eligible to contribute to a Roth IRA; eligibility begins to phase out at $129,000 to $144,000 for single individuals and $204,000 to $214,000 for individuals who are married filing jointly
- Decide where to open your Roth IRA – consider fees to open or maintain an account, consider the customer service of the company you’re considering opening an account with, consider the cost to trade, etc
- Apply for your account – gather all of your basic information and apply for a Roth IRA account with the company you chose in step 2
- Begin investing – before you begin investing consider your goals for investing and choose what to invest in based on those goals
A Roth IRA account is a great tool to utilize when planning for your future. It allows you to take advantage of compound interest and have tax-free dollars to withdraw at retirement.
Most asset management companies offer a Roth IRA as an investment vehicle. Below are four asset management companies we recommend to start a Roth IRA with:
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