Maximize your savings and investments with a Roth IRA Account, a smart and easy way to keep your money safe and secure while accumulating interest.
Available to all residents of the United States aged 18 and older, a Roth IRA, holds cash as well as investments, including mutual funds, securities, and bonds, all of which withdrawn at any time tax-free. Open a Roth IRA at your local financial institution and start saving for your future today.
Tax-Free Money? Count Me In!
A tax-free savings account is not just a savings account. Actually, it is both a savings account and an investment account, which means that you can keep not only savings in it, but also stocks, mutual funds, bonds, and ETFs. What does that mean? If you invest and save your money well, you could be seeing significant returns, all of which are not deductible for income tax purposes. In other words, any amount contributed, as well as any income earned through investments or capital gains, will not be subject to taxes, even when withdrawn from the account.
As a result, opening a Roth IRA account is an easy, tax-advantaged way to set aside and earn money and that lets you save for anything you want. You can set aside money for can a car, an apartment, a home renovation, and without any restrictions. Moreover, you can withdraw the funds without a concrete reason.
Sounds Great! So How Do I Open a Roth IRA?
In order to open a Roth IRA, you need to be a United States resident who is over 18 years old and has a valid social security number. That’s it! It’s easy to do, and you can even have multiple accounts if you want.
Open your Roth IRA by contacting your financial institution, credit union, or insurance company. They will ask for your name, social security number, and date of birth. You may also need to provide supporting documents.
Contribute Up to $5,500 per Year
Saving as much as you can is always a good move, and a Roth IRA account is perfect for that. Although there is a limit to how much you can have in such an account, it also renews annually. As a resident in the United States, the limit is $5,500 for tax-free savings.
If you can’t contribute that much, there’s a rollover each year. According to Investopedia, if you only have $3,000 in your account this year, you can add the remaining $2,500 the next year, but also deposit another $5,500, and so on.¹
That’s a Lot of Interest You Can Earn
Besides depositing your money in a safe place, a Roth IRA gives you great interest rates. Whatever bank you choose, you can expect to earn additional money this way.
RateHub states that interest rates range from 1.6% to almost 2.85% right now, which is nothing to sneeze at.²
Your Earnings Will Not Be Taxed
The top benefits of a Roth IRA are that there no taxes or penalties on your money; every penny is tax-exempt. When you withdraw money from your account, that exact amount becomes available to you to contribute again as of the next calendar year. So, let’s say you withdraw $5,000 this year – next year you’ll be able to contribute that year’s announced maximum, plus the $5,000 you withdrew the previous year.³
You Can Quickly and Easily Open a Tax-Free Savings Account
If you’re a United States resident, why not benefit from a Roth IRA? You can make your money work for you with this special savings account and skip all the taxes that garnish your earnings.
In addition, having a Roth IRA will not have any impact on your other government benefits and credits. Your TANF, Unemployment Insurance, and Social Security benefits will not be reduced because of any income that you earn in or withdraw from your Roth IRA. You will also still be eligible for other federal credits.⁴
The best part is that it doesn’t take more than a few minutes to open a Roth IRA.
One last bit of advice before you run off to open your new account: Do your research and find out what options are out there. After all, not every Roth IRA will offer the same interest rates.
The best way to check this is to research online and compare multiple options before coming to a final decision. That way, you can get the best account and make sure you’re getting the most of your hard-earned cash.
[1] Troy Segal. “What Is A Roth IRA?.” Investopedia, updated 30 April 2020. https://www.investopedia.com/terms/r/rothira.asp
[2] “Roth IRA: How They Work, Rules, Where to Begin” nerdwallet.com. https://www.nerdwallet.com/article/investing/what-is-a-roth-ira
[3] Jean Folger. “Roth IRA Contribution Rules: A Comprehensive Guide” Investopedia, 17 April 2020. https://www.moneysense.ca/save/investing/wtf-is-a-tfsa/
[4] Internal Revenue Service. “Roth IRAs” irs.gov, modified 10 January 2020. https://www.irs.gov/retirement-plans/roth-iras
