How to Open a Roth IRA

You can open a Roth individual retirement account (IRA) by following a few straightforward steps. You’ll first need to determine if you’re eligible to contribute. You should also pick a financial institution, apply for an account, decide on an investment strategy and make frequent contributions.

Stephen Kates, Certified Financial Planner™ and personal finance expert
  • Written by
    Stephen Kates, CFP®

    Stephen Kates, CFP®

    Certified Financial Planner™ Professional and Founder of Clocktower Financial Consulting

    Stephen Kates is a Certified Financial Planner™ professional and personal finance expert with over a decade of experience working with individuals and families who need help with their finances. With experience as a financial advisor for two of the largest financial firms in the country, Stephen has worked with hundreds of clients to build comprehensive financial plans to grow and protect their wealth.

    Read More
  • Edited By
    Michael Santiago
    headshot of Michael Santiago

    Michael Santiago

    Senior Financial Editor

    Michael Santiago, a senior financial editor, joined RetireGuide in 2023. With over 10 years of professional writing and editing experience, he brings a wealth of expertise in creating content for diverse industries, including travel and healthcare. Having traveled to more than 40 countries across five continents and lived in Europe and Asia for several years, Michael's global perspective enriches his work. He combines his strong writing skills, editorial judgment and passion for crafting accurate and engrossing content to enhance the user experience on RetireGuide.

    Read More
  • Financially Reviewed By
    Barbara O’Neill, Ph.D., CFP®, AFC®, CRPC®
    Barbara O’Neill, Ph.D. CFP®, AFC®, CRPC®

    Barbara O’Neill, Ph.D., CFP®, AFC®, CRPC®

    Certified Financial Planner™ professional, Accredited Financial Counselor™ and owner and CEO of Money Talk

    Barbara O’Neill is a personal finance expert with 41 years of experience working at Rutgers University. She is a Certified Financial Planner™ professional and an Accredited Financial Counselor™. Currently, she is the owner and CEO of Money Talk, where she writes, speaks and reviews content related to personal finance. In 2020, she authored Flipping a Switch, published in 2020.

    Read More
  • Published: October 3, 2023
  • Updated: October 5, 2023
  • 9 min read time
  • This page features 6 Cited Research Articles
Fact Checked
Fact Checked

A qualified expert reviewed the content on this page to ensure it is factually accurate, meets current industry standards and helps readers achieve a better understanding of retirement topics.

Cite Us
How to Cite RetireGuide.com's Article

APA Kates, S. (2023, October 5). How to Open a Roth IRA. RetireGuide.com. Retrieved April 17, 2024, from https://www.retireguide.com/retirement-planning/investing/accounts/ira/how-to-open-a-roth-ira/

MLA Kates, Stephen. "How to Open a Roth IRA." RetireGuide.com, 5 Oct 2023, https://www.retireguide.com/retirement-planning/investing/accounts/ira/how-to-open-a-roth-ira/.

Chicago Kates, Stephen. "How to Open a Roth IRA." RetireGuide.com. Last modified October 5, 2023. https://www.retireguide.com/retirement-planning/investing/accounts/ira/how-to-open-a-roth-ira/.

Key Takeaways
  • Your age, filing status and modified adjusted gross income determine how much you can contribute to your Roth IRA.
  • You’ll need to submit paperwork and meet institution-specific requirements to open a Roth IRA.
  • Frequent contributions can boost your long-term retirement savings.

1. Check Your Eligibility

You can check if you qualify to open a Roth IRA by viewing the latest requirements from the Internal Revenue Service (IRS). The IRS uses your filing status and Modified Adjusted Gross Income (MAGI) to determine if you can make a full, partial or no contribution to a Roth IRA. The IRS provides a free worksheet that you can use to calculate your MAGI.

As of 2023, the IRS has set the following Roth IRA contribution limits:

Single, Head of Household or Married Filing Separately (did not live with spouse at any time in the year)
  • MAGI of up to $138,000: Full contribution
  • $138,000 to $153,000: Partial contribution
  • Over $153,000: Ineligible to contribute
Married Filing Separately (Lived with spouse at any time in the year)
  • MAGI of up to $10,000: Full contribution
  • Over $10,000: Ineligible to contribute
Married Filing Jointly
  • MAGI of up to $218,000: Full contribution
  • $218,000 to $228,000: Partial contribution
  • Over $228,000: Ineligible to contribute

Common Requirements

The specific requirements to open a Roth IRA can vary depending on the financial institution and type of account you choose, but here are a few general guidelines.

You can open a Roth IRA at any age as long as you’re earning taxable income. The IRS doesn’t require a minimum contribution to start an account, but you may contribute a maximum of $6,500 to your Roth IRA if you’re younger than 50 years old and $7,500 if you’re older in 2023. However, you may only be able to make a partial contribution depending on your MAGI, as outlined above.

Financial institutions typically require you to fill out an application to open a Roth IRA. You’ll need to supply personal information like your name and Social Security number. Additionally, you must designate at least one beneficiary to inherit your Roth IRA. Once you’ve opened your account, you can invest your money in bonds, exchange-traded funds, stocks and other options.

Should You Hire an Advisor To Help?

You can set up a Roth IRA on your own, but many people consult with a financial  advisor first. Choosing an advisor to assist in navigating retirement and making impactful financial decisions that shape your future can offer significant benefits. They’ll use their industry expertise to help you assess the costs and benefits of a Roth IRA and other retirement accounts. They can also set up your Roth IRA, help you choose investments and manage your portfolio. Additionally, they’ll offer guidance about relevant taxes and encourage  you to make frequent contributions.

It’s essential to research your options so you can find an advisor who will advocate for your best interests. You can interview potential advisors to learn about their credentials, fee structure and experience. Trusted sources like family and friends might also recommend reliable advisors.

Maximum Roth IRA contributions are set by the IRS and minimum contributions are set by financial institutions where accounts are opened. Income limitations by tax filing status apply.
Barbara O’Neill, Ph.D. CFP®, AFC®, CRPC®
Barbara O’Neill Ph.D. CFP®, AFC®, CRPC®

2. Decide How You’ll Manage the Account

Managing a Roth IRA may seem overwhelming, especially if you’ve never opened a retirement account before. You can start your journey by visiting the IRS website to educate yourself about the various regulations for Roth IRA accounts. You should also determine your goals for your retirement and assess how much you can contribute to your account. For example, if you aim to retire within the next decade, you might opt for a more vigorous approach to saving compared to individuals who have recently entered the workforce.

Furthermore, you can decide where you want to invest and what your risk tolerance is based on your goals. You should also plan to monitor your Roth IRA’s performance on a regular basis so you can adjust your investment strategy as necessary. If you’re in the retirement planning stage, assess your finances to decide when you want to start making withdrawals. Finally, you can seek a financial advisor at any phase in this process if you want professional guidance.

3. Choose Where To Open Your Roth IRA

Many banks, investment firms and online brokerages offer Roth IRAs. These financial institutions provide varying services and levels of support, so it’s important to find a company that suits your unique needs. Below are a few considerations to help you find the best fit.

Factors To Consider When Choosing an Institution

Important Considerations
  • Reputation and credibility: Seek out a reputable institution that finance professionals hold in high regard.
  • Fees and expenses: Some institutions charge fees for administering Roth IRAs or for closing the account, so be sure to read the fine print before opening an account.
  • Investment options: An institution that offers multiple investment options provides more flexibility.
  • Online and mobile access: An accessible website, mobile app and other convenient features can make it easier to manage your Roth IRA.
  • Account minimums: Some financial institutions require you to make a minimum initial deposit, while others don’t.
  • Customer service and support: A company with stellar customer service can help you address any problems with your account.
  • Additional account offerings: Some companies offer extra features like a digital advisor to help you make informed investments.
  • Reviews and recommendations: Customer reviews and personal recommendations can help you find a quality institution.

4. Complete Your Account Paperwork

All financial institutions require you to submit an application and provide the necessary paperwork to open a Roth IRA. One important reason financial institutions require you to complete an application is to protect you from identity theft. By verifying your identity through the application process, the institution can ensure that only authorized individuals can access and manage the account. This helps safeguard your personal and financial information, reducing the risk of fraudulent activity and unauthorized access to your funds.

Another reason for paperwork is that it enables a smooth and efficient transfer of funds into your new Roth IRA account. When you provide the necessary documentation, such as proof of identification and account funding information, it allows the financial institution to process your application and set up your account promptly.

What Documents Will You Need?

You’ll likely need several documents to open a Roth IRA, though the specific paperwork may vary depending on your chosen financial institution. It’s helpful to check with your chosen institution beforehand to ensure that you have everything you need.

Required Documents
  • Social Security number
  • Driver’s license or government-issued identification
  • Employment and income information
  • Beneficiary information
  • Bank account information

5. Decide What To Invest In

There are many factors to consider when making investment decisions, such as your financial goals, risk tolerance and investment timeframes. Researching investment options to determine how you want to allocate your assets is a great starting point.

For example, investing in target funds, which are usually structured as mutual funds, allows individuals to maintain a diversified portfolio consisting of stocks, bonds and other investment options. These funds adjust their allocation gradually over time according to a predetermined investment strategy, making them suitable for long-term investments aligned with an individual’s planned retirement date.

It is recommended that you consult with a trusted financial advisor for personalized investment guidance.

6. Contribute to Your Roth IRA Regularly

Regularly contributing to your Roth IRA can help you grow your long-term retirement savings and develop healthy financial habits. Here are some tips for contributing to your Roth IRA:

Tips for Contributing Consistently
Set a Budget
To ensure consistent funding, establish a monthly or annual budget that designates a specific amount solely for your Roth IRA contributions, treating it as a regular expense.
Automate Contributions
Eliminate the temptation to skip or delay contributions by establishing automated transfers from your bank account to your Roth IRA. This process streamlines funding and promotes consistency.
Prioritize Savings
Make contributing to your Roth IRA a top financial priority. Regard it as a vital investment in your future and allocate funds according to that goal.
Start Small, Increase Over Time
If you are unable to make a substantial contribution initially, consider starting with a smaller amount and gradually increasing it as your financial situation improves.
Take Advantage of Windfalls
Use any unexpected financial windfalls, such as tax refunds or bonuses, to make supplementary contributions to your Roth IRA. This can expedite your savings and aid in achieving your goals more swiftly.
Cut Back on Non-Essential Expenses
Evaluate your spending habits and identify areas where you can reduce unnecessary expenses. Redirect the money saved toward your Roth IRA contributions.
Educate Yourself
Stay informed about the benefits and rules surrounding Roth IRAs. Understand contribution limits, eligibility requirements and potential tax advantages. This knowledge will help you make informed decisions.
Set Milestones and Goal
Establish specific milestones or goals for your Roth IRA contributions, whether it involves attaining a particular balance or maximizing your annual contribution limit.
Track Your Progress
Regularly monitor your Roth IRA contributions and track your progress. Seeing your account grow can provide a sense of accomplishment and motivate you to continue contributing consistently.
Monitor Contribution and Income Limits
Roth IRA contributions and income limits are indexed for inflation so it is important to make sure you are monitoring whether you can raise your contributions if the max allowable contribution has gone up. Additionally, it is important to make sure your MAGI is not exceeding the limits. This is especially important if you are newly married or filing single again after leaving a marriage.

Frequently Asked Questions About Opening a Roth IRA

Can anyone open a Roth IRA?
The IRS permits individuals with earned income and specific Modified Adjusted Gross Income (MAGI) qualifications to open a Roth IRA, irrespective of their age.
Do all banks offer Roth IRAs?
Many banks provide Roth IRAs, but to gather information about the services they offer, it is advisable to inquire directly with specific institutions.
What is the minimum amount to open a Roth IRA?
There is no specific minimum requirement for the initial deposit to open a Roth IRA, as financial institutions and firms may have their own minimum deposit requirements. Consult with an institution or firm directly to obtain specific details regarding their requirements.
Advertisement

Connect With a Financial Advisor Instantly

Our free tool can help you find an advisor who serves your needs. Get matched with a financial advisor who fits your unique criteria. Once you’ve been matched, consult for free with no obligation.

Last Modified: October 5, 2023

6 Cited Research Articles

  1. Internal Revenue Service. (2023, August 29). Amount of Roth IRA Contributions That You Can Make For 2023. Retrieved from https://www.irs.gov/retirement-plans/amount-of-roth-ira-contributions-that-you-can-make-for-2023
  2. Internal Revenue Service. (2023, August 29). Roth IRAs. Retrieved from https://www.irs.gov/retirement-plans/roth-iras
  3. Internal Revenue Service. (2023, April 4). Publication 590-A (2022), Contributions to Individual Retirement Arrangements (IRAs). Retrieved from https://www.irs.gov/publications/p590a
  4. Internal Revenue Service. (2023, July 5). Retirement Topics - IRA Contribution Limits. Retrieved from https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits
  5. U.S. Securities and Exchange Commission. (n.d.). Target Date Funds. Retrieved from
  6. https://www.investor.gov/introduction-investing/investing-basics/investment-products/mutual-funds-and-exchange-traded-6