Most of us know we should save for retirement, but sometimes it’s tough to get started. If your employer sponsors a retirement plan \u2014 especially if it offers a generous match to your contributions \u2014 that’s usually the best place to begin. But even if you don’t have a retirement plan through your job, you can still save for the future. One of the best ways to do so is through a Roth IRA.<\/p>\n
An IRA is an individual retirement arrangement<\/b>, a retirement plan that gives you tax advantages when saving for retirement. There are two types of IRAs:<\/p>\n In other words, money in a traditional IRA is taxed when you pull it out, but the money in a Roth IRA is taxed before you put it in.<\/p>\n You make investments in an IRA through an individual retirement account<\/i>. You have just one Roth IRA, but you can have many Roth IRA accounts<\/i>. That may sound confusing, but all you really need to know is that you can have a Roth IRA account at your credit union and a different Roth IRA account at your broker, but they’ll both be part of the same individual retirement arrangement<\/i>. Clear as mud?<\/p>\n It’s important to understand that an IRA isn’t itself an investment \u2014 it’s a place to put<\/i> investments. When you open an IRA account, it’s like an empty bucket waiting to be filled. You might, for instance, buy stocks to put into your bucket, or maybe bonds. Some people use their IRA accounts to invest in real estate, and some simply let their cash sit there, earning interest on certificates of deposit<\/a>.<\/p>\n There are some restrictions on who can contribute to Roth IRAs. These arrangements are designed to help ordinary working folks to save for retirement by giving them a significant tax break. They’re not meant for people with really high incomes.<\/p>\n These income limits are based on your modified adjusted gross income<\/i><\/a>. (If you don’t know what that is, don’t worry about it unless you’re close to the limit.) Also note that Roth IRA income limits generally increase every year.<\/p>\n There are other guidelines and provisions, but these are the basics. If you want more info, check out Publication 590 at the IRS website or contact your friendly neighborhood financial planner.<\/p>\n Opening a Roth IRA account is easy. If you’ve ever filled out a job application, applied for a credit card, or opened a bank account, you’ve got what it takes to open a Roth IRA account.<\/p>\n Deciding where<\/i> to open your Roth IRA account is the toughest part of the process. If you already have an investment advisor, ask her for recommendations, but look for other options, too. Many banks and credit unions offer IRA accounts (though you’ll usually be able to invest only in deposit accounts, like CDs and savings accounts<\/a>).<\/p>\n If you’re willing to make some decisions on your own, you can open an IRA account through a discount broker or mutual fund company. There are a lot of good options out there, but you might start your search with these firms:<\/p>\n I recommend that you set aside an hour or two some Saturday morning to explore the options over a cup of coffee and a bowl of Lucky Charms. With a little research, you should be able to find a company and program that suit your needs. When you’re shopping around for a place to open an IRA account, ask the following questions:<\/p>\n\n
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<\/span>Roth IRA Rules and Requirements<\/span><\/h2>\n
For 2012:<\/h3>\n
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A few other useful facts:<\/h3>\n
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<\/span>How to Open a Roth IRA Account<\/span><\/h2>\n
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