Monthly Archives: August 2011

Starting a Roth IRA

A Roth IRA is a tax- deductible fund that was introduced by Senator William Roth of Delaware in 1997, as part of the Taxpayer Relief Act. Putting one’s money into a fund of this type can be a very profitable way of investing for retirement. Absolutely anything can be invested in such a retirement fund, and all of the money so invested may be withdrawn at any time free of tax. Opening a Roth IRA is likewise a very simple and easy process: The customer simply goes to the bank and ask for the forms he or she needs to fill out. Having done so, he then returns the forms to the bank and deposits money into the newly- opened Roth IRA account, by one of three ways: a check, cash, or a transfer from one’s savings account.

Constant fund monitoring is crucial. It is also possible to open a Roth IRA with an online brokerage. Fidelity Investments is an example of such a company. Registering for an account in this way is even simpler, requiring the customer to give some personal information. Once the applicant has given this information, he can deposit money into his new account. The funds in the account can then be invested in almost anything, including mutual funds, stocks, and bonds.

Tax refund money should be invested in one’s Roth IRA. There is a limit on the amount that can be invested in the account each year, depending on one’s age (those over 50 can pay an additional “catch up” contribution). This maximum changes each year, and so it is important to check this upon starting the account. How much one can invest also depends on one’s tax- filing status, that is, whether the holder is (1) single; (2) married, filing separately; or (3) married, filing jointly. Contributions can never be made with investments; they can only be made with cold, hard cash. And over the age of 70 1/2, there is no minimum to how much can be deposited in the account.

For anyone far- sighted enough to think about planning for the future, opening and investing in a Roth IRA can be a secure, intelligent path to take.