A Roth IRA is a retirement savings account - but, unlike a typical IRA account, you fund the Roth account with money after taxes. So there's zero tax advantage to opening a Roth IRA. Having said that - because the money going in is already taxed - you can take any money you put in - out without paying tax. If you take money out of a normal IRA it's taxed as income because it wasn't taxed going in.
If your account is open at least five years and you reach 65, you can take all your money out of a Roth IRA tax free.
You should have 6 mo living expenses saved in case of emergency like job loss etc.
Then you should fully fund a 401K if your employer offers one.
Then you should put extra money into Roths. A roth is simply and Individual Retirement Account where you put money after taxes to save for retirement. When you take the money out at that later date you do so without paying tax on the gains.
Google Roth IRA for more information.
Before you ever consider this,, please have savings,,,
Too often people open these without having a penny in emergency savings.
Then,,, something happens like a job loss or car breaks down, or medical bills,,, They have to close the ira
Do you have an extra 5 grand in savings?
Roth IRA - You earn taxable money and contribute not more than $5,500 to the account per year. Unlike a Traditional IRA the money can not be deducted from your income tax. While in the account you pay NO capital gains tax on earnings. When you reach 59.5 you MAY receive tax FREE distributions, but do not have to receive them until death. If you earn too much you can not contribute to a Roth IRA, but the average 22 year old is not faced with that...problem. Thanks
Here is a great helpful site that I put together to help people just like you. http://www.contributeira.com
Contact a financial advisor. They can walk you through the nuances and open an account for you.
I am 22 and i am interested in Roth IRA but i have no knowledge of how it works and how to get.
