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Step 1: What's An IRA?

An Individual Retirement Arrangement (yes, it's "Arrangement," not "Account") is a personal savings plan that allows you to contribute up to $5,500 a year! (And if you're 50 or older, you can make an additional $1,000 "catch-up" contribution.) Well, that's nice and all, but what's really in it for you?

You keep more money
An IRA is a (legal!) way for you to keep more of your money from Uncle Sam. And it's possible you have a delightful choice: Do you want to save on taxes now with a traditional IRA, or when you retire with a Roth IRA?

You'll have a rosier (and more flush) future
Every dollar you invest today will work for you until that glorious day when you stop working. The sooner you open an IRA, the more money you'll have for your golden years.

Why you should open an IRA now
You have until tax day in April to make a contribution to your IRA for the previous year. Hop to it!

It's easy to open an IRA
All you have to do is follow these steps to get started saving now and for your future.

  1. Figure out whether you're eligible.
  2. Pick the best option.
  3. Open an account.

Let's get started by determining your eligibility!

Read/Post Comments (5) | Recommend This Article (25)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 11, 2009, at 10:55 AM, prginww wrote:

    I here a lot of good stuff about IRA investing but where do I learn the mechanics of the IRA investing. I have a lot of questions on this. I have a share builder account and I would like to start a tax free account. Is there a book or a article on the mechanics of how to trade and so forth?

  • Report this Comment On April 11, 2009, at 11:20 AM, prginww wrote:

    Blue, I have a sharebuilder Roth IRA - it works the same way the individual account does where you pick your own stocks - you can do the one, six or 20 plan. It costs the same too. If you sign up by April 15th they give you 7 free trades. I don't make risky picks for my roth. I pick the JNJs, PG, KO...big stocks with dividends since I have a long time until retirement. I plan to just buy and hold in that account until I retire. I do other things in my individual account. I really like sharbuilder. For stocks I really want to buy that sharebuilder doesn't trade. I have a Tradeking account. They have the best customer service. I think they also offer a roth IRA. I used to have a mutual fund roth IRA but it was such a dud thru American Funds that I closed it. Anyway, that is just what I do, not sure if it helps you.

  • Report this Comment On June 28, 2009, at 12:16 AM, prginww wrote:

    The self-directed IRAs I have in a couple of brokerage houses have lost a lot of value, along with my conventional investments. A friend has an IRA with a credit union. She believes it's immune to these market forces. But I assume the CU invests her money in the same market instruments we all have and that her account is suffering the same way, although she apparently believes her investment never diminishes. Am I wrong?

  • Report this Comment On December 17, 2010, at 7:15 PM, prginww wrote:

    Most credit union IRAs are glorified money market accounts. They pay 1-2% I dont know if they actually say "guaranteed" but there is no upside. Its a savings account.

  • Report this Comment On November 30, 2013, at 9:01 AM, prginww wrote:

    I am about to retire at the age of 63. I have $300.000 in a 401 account at work. Should I open and put it in a IRA or Roth IRA account??

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