Created by the Taxpayer Relief Act of 1997, the Roth (named for William Roth) Individual Retirement Account, differs in many ways from typical IRAs that help you build up a retirement savings.

The Roth IRA allows you to invest in stocks, mutual funds, real estate, notes and certificates of deposit. As with other IRAs, there are certain types of eligibility and filing status requirements that are created through the Internal Revenue Service.

What are the differences between the traditional IRA and Roth IRA?

The traditional IRA has the following points:

1.It has tax deductable contributions that depend on the overall income level.

2.Withdraws can begin at the age of 59.5 years and are mandatory after 70.5 years.

3.Taxes are paid on the earnings when withdrawn from the IRA.

4.You can use the funds of the IRA to purchase many different types of investments from stock and bonds to certificate of deposits and real estate.

5.There are no income restrictions to the IRA.

6.Any funds withdrawn before the age of 59.5 are subject to a 10 percent penalty.

The Roth IRA has the following points:

1.The contributions to the Roth IRA are not tax-deductible.

2.There is no mandatory distribution age.

3.All earnings and principle are 100 percent tax free; however certain rules and regulations must be followed.

4.Funds can be used to purchase many different types of investments.

5.This is only available to single-filers who make $95,000 or more, or to married couples who make more than $150,000 annually.

6.The contributions can be withdrawn without penalty, but there are some conditions.

How to Open a Roth IRA

If you are going to open a Roth IRA, just follow this handy guide.

1.First, you need to determine if you qualify for a Roth IRA. The eligibility requirements change over time so make sure that you are allowed to get a Roth IRA before attempting to get one.

2.Now, you want to determine which investment management company you want to do your investing through. The best are companies like Vanguard, Fidelity and Charles Schwab.

3.Now, you want to enroll once you know what investment company you want to be a part of. You can join a Roth IRA through the internet, over the phone, or through the mail.

4.Remember to choose a company to hold your funds that matches your needs, goals and financial costs.

5.Do up the paperwork that is required of you from the company you are investing through. You also need to state the amount of funds you intend to invest and mail to the investment manager.

Roth IRA Tips

If you are investing in a Roth IRA, there are some tips to remember to ensure that you get the most out of your investments. That will give you more money for your retirement.

-Always consult with someone like a financial advisor at an investment company. This is especially true if you do not have any experience in the financial world because financial advisors are experts who know what to invest in and how to make you money.

-If you are 50 years and older, you may want to go for an accelerated retirement plan. This gives you the ability to invest $1,000 extra per year, giving you more money to earn back for your retirement.

-You can withdraw prescription cialis generic money for pre-approved expenses that can include the purchase of home, medical expenses and tuition fees. Always make sure that you get confirmation with your investment management company before you attempt to withdraw money.

-You can get some large penalties when you withdraw money from your Roth IRA. It can be 10 percent or more.

When you are looking to invest money for your retirement, there are few better ways than through an IRA or Roth IRA. Buying and selling stocks on Roth IRA plans can make you a lot of money if you qualify. Look at the various requirements to ensure you can get a Roth IRA and then begin investing your money into it for your retirement when no money will be coming in.

Author Bio: This article was written by Scott M. Bradley. How Do You Start Making Money From The Stock Market?

Category: Finances
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