How to Open an IRA

If you have an employer offering a less than stellar retirement plan, or if you are tired of moving your retirement savings every time you change jobs, you should consider opening you own Roth or traditional IRA. This allows you to take control of your own retirement savings. These plans are also great if you are self-employed and don't have an employer-based plan available.

Difficulty:

Challenging

Instructions

1. Decide whether you want to open a traditional or a Roth IRA. Decide based upon your current income and the tax bracket you think you will be in after you retire.

2. Choose to open a Roth IRA if you are 70.5 years old or younger, have a low to medium income and expect to be in a higher tax bracket after you retire.

3. Open a traditional IRA if you have a high level of income, if you expect to be in a lower tax bracket after you retire or if you are 71 years or older.

4. Seek out a broker to set up the Roth IRA account. Search for a discount broker to get the best deal possible. Ask the broker about the annual fee charged, if any. Ask about fees the broker charges for buying and selling stock. Find the best rate on these as possible, as they add up quickly over the years.

5. Find out your maximum allowable contribution for the year, which can change every few years to keep up with the rate of inflation. Contribute the maximum amount each year if possible.

Resources

• The Motley Fool gives practical investing advice for beginners and more advanced investors