How to Open a Roth IRA

A Roth IRA is a true gift for retirement savers. While you won't get a tax benefit now, contributions and earnings in the account grow tax-free. In addition to being able to take distributions in retirement tax-free, Roth IRAs also don't have required minimum distributions, so you can choose to leave the money in the account to keep growing after you've retired.

That means opening a Roth IRA is a strong first step toward supercharging your retirement savings. Here's how to do it.

How to start a Roth IRA

1. Figure out if you are eligible

Roth IRAs have income limits, which can reduce or eliminate your ability to contribute to a Roth.

• For 2024 and 2025, the contribution limit is $7,000 for those under 50 and $8,000 for those 50 or older. However, that contribution limit will phase down and eventually be eliminated completely at higher incomes. If you earn $146,000 or more as a single filer in 2024 ($150,000 in 2025) or $230,000 or more as a joint filer ($236,000 in 2025), you are in the income range where your Roth IRA contribution limit will start to be reduced. Read our detailed overview of Roth IRA limits before opening an account.

• If you are not eligible for a Roth IRA because your income exceeds the allowed limits, consider the backdoor Roth IRA strategy. In short, it lets you open a Roth by converting money from a traditional IRA.

2. Decide where to open your IRA

If you're a “do-it-yourself” investor, open your Roth IRA at a brokerage.

For people who want to pick their own investments, opening a Roth IRA at an online broker makes a lot of sense. At the best brokers, you’ll find a large list of low-cost investments to choose from, including index funds and exchange-traded funds. The top brokers also offer extensive retirement planning tools, robust customer service and reasonable account minimums and fees. And you maintain complete control over how your retirement funds are invested.

If you're a “manage it for me” or hands-off investor, choose a robo-advisor.

If you’d rather have someone pick an investment portfolio for you, you can open your Roth IRA at a robo-advisor. Robo-advisors are online services that build and maintain a diversified portfolio for you. You pay a small fee for the service, but their fees generally are far lower than a human financial advisor.

For people who want to invest for retirement but don’t want to worry about managing their portfolio over time, a robo-advisor is an easy choice. The advisor will offer portfolios that vary based on the amount of risk you want to take, with “aggressive” ones for people who want a high percentage of their portfolio in stocks and “conservative” for people who seek a less volatile investment account.

» See our list of the best Roth IRA providers in both categories

3. Choose how much you want to invest

How much do you need to open a Roth IRA? While there generally isn’t a fee for opening a Roth IRA, there may be other costs and requirements depending on your provider and selected investments. A few brokers and robo-advisors — but not all — may require a minimum amount to open an account with them.

Think about your budget, your investing goals and how long you have to invest. If you want to max out your contribution for the year and you're eligible to contribute the full amount, that works out to about $583 in 2024 or $666 in 2025 if you're under age 50.

» Roth IRA calculator: Find out how much your contributions could be worth

4. Gather your paperwork to open the account

So, you’ve learned all about how Roth IRAs work and even settled on a provider. Now what? It’s time to gather any paperwork or documentation you may need to set up your Roth IRA account.

Exact requirements may vary based on the financial institution, but generally, you may want to have the following information available during the sign-up process:

• An ID (such as a state driver’s license or a passport) to confirm your identity, address, and date of birth.

• A Social Security number or tax identification number.

• Proof of employment, if applicable.

• The name, addresses and dates of birth of any beneficiaries you’d like to add to the account.

• The routing and/or account numbers for the bank or investment account you’ll use to fund your Roth IRA.

Once you have all that information handy, head to the provider's website to open your Roth IRA account.

5. Pick your investments

A Roth IRA is an account type, not an automatic investment. Contributing is just the first step. If you want to build wealth over time, you also need to invest that money.

If you're a hands-off investor and you've opted to open your Roth IRA at a robo-advisor, that service will choose a diversified investment portfolio for you. It will also manage that portfolio over time, investing future contributions and making sure your overall strategy is on track. (Robo-advisors generally are registered investment advisors operating under a similar structure to human investment advisors.)

If you've opened your Roth IRA at a brokerage firm, you can get that diversification on your own by building a portfolio out of index funds and ETFs. To do that, you’ll want to decide how much of your money to put toward riskier investments, such as stock funds, and how much you want to keep relatively safe in, for example, bond funds and cash. This mix is called your asset allocation.

IRAs give you access to a large pool of investment options. Once you’ve decided on your allocation, you can select specific funds to meet that. And if you get stuck? Use a model. Check out the portfolios used by robo-advisors (often displayed on their websites), then mimic them. Be sure to rebalance the investments as they shift out of the original allocation you decided on because you won’t have robo-advisors to do it for you.

» More guidance: How to invest your IRA

Important considerations when opening a Roth IRA

A few additional things you should know:

• If you have a 401(k) that offers matching dollars and you’re not contributing enough to earn them all, that's where you could direct your retirement savings first.

• There are two main types of IRA: Roth and traditional. Traditional IRAs can come with an upfront tax break, but the Roth is often a good choice for those who qualify. The Roth IRA's withdrawal rules are much more flexible than traditional IRA withdrawal rules, and there are fewer restrictions for retirees. Here's more on a Roth vs. traditional IRA.

• Once you figure out how much you can contribute, consider setting up automatic transfers. Not only do you avoid the hassle of initiating the transfer each month, but you ensure you’re saving regularly. (Also, some brokers waive their initial deposit requirement if you agree to automatic transfers each month.)

• Watch your contribution amount. Contributing more than the annual limit — $7,000 in 2024 and 2025 ($8,000 if age 50 and older) — may leave you subject to an IRS penalty. Keep in mind that the contribution limit is for all your IRA accounts combined — if you have a Roth and a traditional, that limit is a total across both accounts.