How to Open an IRA Money Market Account
A money market IRA account is one of the more conservative IRAs available. For this type of IRA, you are investing in money--specifically, United States Treasury bills and certificates of deposit (CDs). Money market IRAs earn interest at a higher rate than a regular savings or checking account. You can pretty much count on a steady return that is not as risky as investing in traditional stocks.
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Instructions
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Save a substantial sum of money with which to open your money market IRA. Many banks' minimum balance requirement for this type of IRA tend to be high, in the thousands of dollars.
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Compare interest rates and minimum deposit information among financial institutions that offer a money market IRA. This is a common kind of IRA, so your options should be varied.
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Examine the various pros and cons of the banks you have contacted to make your final decision. If you don't have a lot of money to invest, you may consider the bank with the highest return on your investment. If you do have a lot of money to invest and a little more time, you may consider a riskier fund with a better chance of high return.
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Fill out the appropriate paperwork to open your account. This includes your personal information, name and address of your employer and bank account and routing numbers. Depending on the company, this process may be completed online or by mail.
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Designate a beneficiary who will inherit the IRA from you after your death. If you do not name a beneficiary, your IRA may go to your estate. This could potentially cause tax problems for the inheritor of your estate.
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Tips & Warnings
The assets in your money market account are insured by the Federal Deposit Insurance Corporation (FDIC). This is a security measure to protect your investments. It means that if the bank that is custodian of your money market IRA goes out of business, you will not lose your money, up to a certain amount.
A money market IRA may be a good account for you if you do not have any other type of retirement plan and are quickly approaching retirement age. Because money market funds are relatively safe and stable investments, you are less likely to lose a large percentage of your IRA's value in the few years left before you are allowed to draw on it.
