How do I Open a Self-Directing Roth IRA?
Roth IRAs are a form of retirement accounts allowed in the United States and are used due to their tax structure. Roth IRAs were established as part of the Taxpayer Relief Act of 1997, and named after the late Senator William Roth. Unlike a traditional IRA, Roth IRA withdrawals are tax-free. There are also no taxes on dividends or interest with a Roth IRA. However, the drawback of a Roth IRA is that contributions are not tax-deferrable. Opening a Roth IRA is a simple task with few restrictions.
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Instructions
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Instructions
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Go to the Web site for a brokerage. Numerous brokerages offer the option of opening a Roth IRA. Some of the largest and most well-known brokerages that offer Roth IRAs are Fidelity Investments, Charles Schwab, Scottrade and ETrade. There is very little difference between the major brokerages, as most offer similar fee and commission structures, and products.
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Register an account with the brokerage you have selected. This can be done online and will only require some personal information similar to applying for a credit card or opening a bank account.
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Open a Roth IRA account with the brokerage you are registered with. This is also done on the brokerage Web site and will require very little time or information. The brokerage will be able to pull the information from your main account to open a Roth IRA.
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Transfer funds into your newly opened Roth IRA account. Roth IRAs have a limit on the amount allowed to be contributed each calendar year. For 2010, the limit is $5,000, for anyone under 50 years of age and $6,000, for anyone 50 years old or older. This maximum can change and should be checked when opening a Roth IRA.
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Allocate your funds into investments of your choice. Your brokerage will allow you to invest your Roth IRA funds into stocks, bonds, mutual funds, CDs and any other financial products they offer. Choosing where to allocate the funds in the Roth IRA is your choice. The brokerage will also offer financial advising for a fee, which is an optional service.
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References
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