What the is a Roth IRA account?

Question

I've heard of people putting their mutual funds, stocks, retirement money in a Roth IRA account.
How can i do this?
I want to invest in stocks should i open a roth IRA account but i already have a checking account in the bank with lots of money?
Why do i need a Roth IRA if i am investing in stocks?
I have a 401k plan and i have a pension plan with the military so i have all the dam retirment money i can have when i am retired.

Answer 1

ok, a Roth IRA is a retirement account. The difference between a regular IRA and a Roth is that the money invested in a Roth is after tax money and that money grows tax free - you'll never have to pay taxes on the interest. You can take it out without penalty anytime after you're 59 1/2. You can only put 4000/year in an IRA. Oh and you can withdraw your contributions to the Roth anytime without penalty but if you take the earnings out before you're 59 1/2 they penalize you.

Answer 2

The only limits on the amount of retirement money you can have are the contributions you can make per year.

There are two ways to get money into a ROTH IRA. You can make contributions directly(up to 4K per year). Or you can roll over a traditional IRA, pay the taxes now and create a ROTH IRA. There are currently income limits on both of these. However the rollover limit will drop in 2010.

If you are going to have a high income in retirement(pension and required IRA distributions), then a ROTH IRA would be a good idea, because you will not have to pay taxes on the money when it is taken out. Also if you have a need for emergency funds, you can take out ROTH IRA contributions(but not earnings) at any time for any reason.

Answer 3

You already have a lot of investments. A Roth IRA is just like a regular IRA, or Individual Retirement Account, except that the Roth IRA is an investment after taxes. The tax has already been paid on it, so when you do decide to take your money out, you will not owe any income tax on it. A 401k plan uses pre-tax dollars, so it becomes taxable income when you take money out of it. Military retirement, I believe, is tax free. That may have changed however, so you should check on that.

Answer 4

There are basically two fundamental kinds of "IRA"s, the regular IRA which is funded with pre-tax dollars, and the recently invented Roth IRA, which is funded with after-tax dollars. Basically, you get a tax deduction for IRA contributions (which then grow tax-deferred until you retire, and you pay regular income taxes on whatever you withdraw after retirement), but with a Roth you use dollars you have ALREADY paid income taxes on, and as long as you leave them in the Roth, you can withdraw the funds after age 59.5 without paying any more taxes.

The younger you are, the better deal the Roth option is.

Since you have a 401(k), make sure you are funding that at least to any company match before considering any other options, that's FREE money.

Answer 5

You can open a Roth IRA just about anywhere. I'd suggest doing it through some online source like etrade or ameritrade. They all work fine.

Roth IRA is a great place to invest for retirement. Money you put in there is after tax, but it grows tax free. So if you put in $5000 and it grows to $500,000, you won't have to pay any taxes on it when you start to withdraw at retirement age. You can deposit up to $4000 per year in a Roth IRA. Keep in mind that it is a RETIREMENT account.

Answer 6

If you are young, a Roth IRA may be your best bet due to the compounding effect. Roth's are never taxed, but you do not get the same tax enefit from contributions. The money comes out tax-free after five years (contributions only) or 591/2 years of age. The tax rates in this country must necessarily rise, so taking a texed withdrawl from your 410(k) will get hit hard by taxes, but a tax-free Roth will not.

Answer 7

You are not able to transfer non-IRA resources, besides cash, into an IRA. You can promote the resources after which give a contribution the money to the IRA. Up to April 15 of every 12 months, you'll be able to contribute for the earlier one 12 months. (For instance, you'll be able to give a contribution for 2009 till April 15, 2010.) You are not able to backdate contributions farther. (For instance, on April sixteen, 2009, it grew to become too past due to contribute for 2008.)