Can someone please explain what a ROTH IRA is?

Question

I heard 401K's & Roth IRA's are the only 2 things the government does NOT consider when determining how much money i get for financial aide.

How would i go about getting one? Is there a minimum balance? Do i need to be employed through a company to open one? Is there penalties? Please be as specific as possible. Thanks

I am 20 years old, looking to start an emergency savings

Or a retirement savings, whichever

whats a money market account?

Answer 1

You need income of as much as you put in your ROTH. A ROTH is tax free retirement savings. You can take back any money you put in before retirement but not the growth without penalty and tax.
Great idea to get one young and contribute every single year.
You are allowed $4,000 a year if you earn that much.

Answer 2

IRA- there are two kinds a Standard IRA and a Roth IRA.
In order to invest in a Roth IRA or standard IRA it must come from earned income from that year.
For the Roth IRA if you put the maximum in $4,000 you pay taxes on that 4,000 at the end of the year but that $4,000 in your Roth and any profit or interest you make over the years is TAX FREE. which is a tremendous benefit when you retire since that money as you take it out does not go against your taxes for that year and you get all of it (like taking it out of a savings account)

Answer 3

For financial aid, the government also will not consider the assets in a Coverdell ESA or a state 529 account.

A 401K is set up by your employer. It is usually a good deal because the employer will match your contribution somewhat. A Roth IRA is your own independent account. It is very cool because you will never be taxed on money you take out of it when you get to retirement age of 59.5

Answer 4

401s and Roths are retirement accounts .
Are you an old person returning to school ?
A young person would not yet have these .

401K is a company retirement that often has a matching feature to it . ( and you get at 60 yrs old )
A regular IRA and Roth are independent plans that you contribute to on either a pre-tax or post tax basis .
You get your money when you turn 60 years old .

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Answer 5

come back on your plan administrator and ask what different investment selection they have. identifying to purchase shares in a funds industry fund is very secure... yet you will no longer make plenty in "earnings". Ask to make certain a chart with each and every of the obtainable Mutual funds, and so on. right here is something greater exiting: 60% shares - 30% U.S. 30% foreign places 20 % Bonds 20% funds industry funds you're 25 years previous - you're able to be aggressive on the grounds which you desire to apply the years forward to make funds and that would not ensue once you purchase shares in a funds industry fund purely. The Roth IRA is barely the outer equipment.... what you do contained in the IRA is as much as you. you're able to do something from identifying to purchase inventory in guy or woman companies to mutual funds, bonds.... a number of them even dabble in actual components.

Answer 6

As for you emergency fund put that in a Money Market account, that way you still have some access to it and get as much interest as possible. You need to have at least three months salary.