Getting Started with a Roth IRA
To get a Roth IRA started, you open an account with a brokerage or robo-advisor, fund it within the annual IRS limit, and choose investments that match your timeline and risk tolerance. The account grows tax-free, and qualified withdrawals in retirement are not taxed, making it a powerful tool for long-term savings.
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Choosing a Provider
Compare providers on fees, investment options, and ease of use. Brokers like Fidelity, Vanguard, and Schwab offer broad fund selections and low costs. Robo-advisors such as Betterment and Wealthfront automate investing for hands-off investors. Some banks also offer Roth IRAs, but their mutual fund lineups may carry higher fees.
Opening the Account
The process typically takes about 15 minutes online. You will need a government-issued ID, Social Security number, and a bank account to fund the IRA. You must have earned income from work to contribute, and contributions are limited to your taxable compensation for the year.
Income and Contribution Limits
For 2025, the Roth IRA contribution limit is $7,000 if you are under 50, and $8,000 if you are 50 or older. Your ability to contribute begins to phase out at higher modified adjusted gross incomes. Single filers with incomes over $146,000 and married couples filing jointly over $230,000 see reduced contribution room.
Funding and Investing
After opening, transfer or deposit money into the account. You can fund it with a lump sum or set up automatic monthly contributions. Once funded, choose investments such as index funds, target-date funds, or individual stocks based on your retirement timeline and comfort with market risk.
Roth IRA Rules and Benefits
Contributions can be withdrawn at any time without taxes or penalties. Earnings can be withdrawn tax-free after age 59½ and after the account has been open for at least five years. There is no required minimum distribution during the original owner's lifetime, which allows the money to keep growing.
Roth vs Traditional IRA at a Glance
| Feature | Roth IRA | Traditional IRA |
|---|---|---|
| Contributions | Made with after-tax dollars | Made with pre-tax dollars |
| Withdrawals in retirement | Tax-free | Taxed as ordinary income |
| Required minimum distributions | None during owner's lifetime | Required starting at age 73 |
| Early withdrawal penalty on earnings | Yes, before age 59½ and 5-year rule | Yes, before age 59½ |