How to Set up an IRA Account

How to Set up an IRA Account
Set up an IRA Account

Decide whether you want a Roth IRA or a traditional IRA. A traditional IRA allows you to take a current-year tax deduction, while a Roth IRA accrues income tax free but does not allow for a current tax deduction. The question you need to ask yourself is whether you want to pay taxes now or pay taxes later. There are also a few other specialized IRAs such as the SEP IRA (self-employed or small business), a SIMPLE IRA (employee pension plan) and a Self-Directed IRA (allows the holder to make their own investments into the plan).

Choose a place to invest your money. There are many IRA brokers with varying fees and trading commissions. You can also set up an IRA by using a bank, mutual fund company, employer, stockbroker or other financial institution who will act as a custodian or a trustee. Examples are Vanguard, Fidelity Investments, T. Rowe Price and Schwab.

Download or request the applicable forms to open up the account. Complete the forms and attach a check for the amount to be funded.

Choose the types of investments that you want your IRA invested in. Examples are stocks, mutual funds and index funds.

Watch your investments grow until retirement.