How Do I Open a Roth IRA?
Written by Andrea Coombes
Edited by Carolyn Kimball
Fact-checked by Dayana Yochim
Opening an IRA is a lot like opening a bank account, with one big difference: You'll choose investments so your savings can grow and support your luxe retirement lifestyle, or really any retirement lifestyle you choose.
Quick take: Opening a Roth IRA is super easy.
- Make sure you're eligible
- Open your Roth IRA account at a brokerage
- Transfer money into your account
- Pick your investments
- Set up auto-saving
Tell me more! Let's dive into the details of how to open, and invest, your Roth IRA:
- Make sure you’re eligible. There are income limitations. Here’s a handy IRS table on Roth IRA income limits.
- Open your account at a brokerage. You can open Roth IRAs at many banks, but your best bet is an investment account so you can, you know, invest your money. If you’re not sure which broker is right for you, check out the roundup of the best brokers for IRAs on our sister site, StockBrokers.com. When you set up your account, make sure you pick the “Roth IRA” option.
- Transfer money to your new Roth IRA. Most brokers let you open an account with $0, so you can start with just, say, $50. (The one caveat is the investment you choose may have a higher minimum; for example, some mutual funds have a $1,000 minimum initial investment.) The maximum you can contribute currently is $6,500 per year into your Roth IRA, plus an extra $1,000 if you’re 50 or older. Those contribution limits often increase each year so keep an eye on that if you’re one of those maximal savings types.
- Pick your investments. Simplest option? Choose a target-date fund. These one-stop shops provide a diversified portfolio that gradually gets more conservative as you approach retirement. Check out our story on investing for retirement for more ideas.
- Set up auto-saving. By transferring a set amount from your checking or savings account to your Roth IRA every month, you are paying yourself first. So. Very. Smart. And it can be a small amount, such as $25. Go do it now. And then go sip that cocktail/mocktail on the beach and rest easy knowing you have taken a huge step in planning for your future.
Bottom line: Roth IRAs are a great way to save for retirement. While you don't get the upfront tax deduction available with a traditional IRA, with a Roth all of your retirement withdrawals are tax-free. And opening a Roth is easy peasy. You got this.
In our experience...
The first retirement account I ever opened was a Roth IRA, back in the early 1990s. A friend recommended it, so I opened one and started putting small amounts of money in every month, even as I was working to pay off credit card debt. Now that I’m older, I’m so grateful to my young self for opening that Roth, both because it got me into the savings habit, and because all the money in my Roth will come out entirely tax-free in retirement. Can I get a hallelujah?
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About the Editorial Team
Andrea Coombes has 20+ years of experience helping people reach their financial goals. Her personal finance articles have appeared in the Wall Street Journal, USA Today, MarketWatch, Forbes, and other publications, and she's shared her expertise on CBS, NPR, "Marketplace," and more. She's been a financial coach and certified consumer credit counselor, and is working on becoming a Certified Financial Planner. She knows that owning pets isn't necessarily the best financial decision; her dog and two cats would argue this point.
Carolyn Kimball is Managing Editor for Reink Media Group and the lead editor for content on investor.com. Carolyn has more than 20 years of writing and editing experience at major media outlets including NerdWallet, the Los Angeles Times and the San Jose Mercury News. She specializes in coverage of personal financial products and services, wielding her editing skills to clarify complex (some might say befuddling) topics to help consumers make informed decisions about their money.
Dayana Yochim has been writing (articles, books, podcasts, stirring speeches) about personal finance and investing for more than two decades, focusing on bringing clarity and the occasional comedic aside to what is often a murky, humorless topic. She’s written for NerdWallet, The Motley Fool, HerMoney.com, Woman’s Day, Forbes, Newsweek and others, and been a guest expert on "Today," "Good Morning America," CNN, NPR and wherever they’ll hand her a mic.
