Build Your Retirement Funds with a No Fee Roth IRA

2007-10-15 12:53:47

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Ways to Save for Retirement

You work hard for your money so you want to set some aside to enjoy during your retirement years.

One way of saving for retirement is by opening a bank deposit account. The yields vary according to the type of account, and your interest income is subject to withholding taxes.

You can also consider opening a traditional IRA account. The amount of your investment and contributions each year can be deducted from your taxable income. The money you yield from your IRA account is not taxable. You can make contributions provided you are no more than a certain retirement age. Yields under an IRA account are much higher than under a bank deposit account.

Any withdrawal from your IRA account before you reach the age of 60 is subject to pretermination penalty, unless you were using it for medical or educational reasons, or to buy a home for the first time. IRA contributions end when you reach a certain retirement age.

Roth IRA Compared to Traditional IRA

Named after the senator who endorsed it in 1997, the Roth IRA also provides good yields that are tax free.

However, there are several advantages compared to a regular IRA. You can make after tax contributions to your Roth IRA, and you can continue to contribute beyond retirement age as long as you have earned income. This will enable you to save excess funds that you can pass on to your heirs.

This type of IRA also allows you to withdraw without penalty not only for the same reasons as traditional IRAs but also if you have had the account for at least five years.

No Fee Roth IRAs and Where to Find Them

There are various financial institutions that advertise no fee Roth IRAs. Account fees are waived not just for Roth IRAs but for traditional IRAs as well.

However, other fees for funds management and expenses do apply even to no fee Roth IRAs. There are also certain types of Roth IRA funds that may be subject to some short term trading fees, like stocks.

Similar to balance restrictions for no fee checking accounts, there may be certain conditions imposed for no fee IRAs.

You can look up various sites on the web or visit your local financial institution to inquire about no fee Roth IRAs. Each instutition has its own policies and conditions, but all of them have to conform to current federal and state tax laws as well.


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