Individual retirement accounts (IRAs) are the cornerstones of a solid retirement investment portfolio. The most popular of these accounts is the Roth IRA, which differs from other types of IRAs by offering tax-free earnings accrued over the life of the account. Roth IRAs also come with more specific requirements than traditional IRAs, so it is important to make sure you are eligible for one. Even so, obtaining a Roth IRA is a very simple process.
Step 1
Determine that a Roth IRA is the right type of IRA for you. There are various IRAs available through your employer, such as a simple or SEP IRA, and these have higher overall investment limits. Traditional IRAs are also available to the upper-class wage earners that are not eligible for a Roth IRA.
Step 2
Make sure you meet all the necessary eligibility requirements. To open a Roth IRA, you cannot already have a Roth open. You must also have earned income during the tax year in which you are opening your account, and that income must be less than $114,000 if you are filing your taxes individually, or $166,000 if you are married and filing jointly.
Step 3
Decide what type of investment strategy you want to go with. This varies from extremely conservative investments, which offer low risk and low reward, to extremely aggressive options that feature high risk and potentially high reward. The type of investment strategy you go with will determine what kind of investments your account manager uses to fund your Roth IRA.
Step 4
Find an account manager or financial investor to manage your Roth IRA. You should consider managers from banks and investment firms as well as online entities such as Edward Jones and e-Trade. You should ask each prospective manager what their commission rate for the Roth IRA is and what kind of monitoring services, such as online banking, are available to you, as well as the anticipated rate of return on the Roth IRA.
Step 5
Sign an agreement with the account manager and make an initial deposit with cash or check.
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