How to Start a Roth IRA: A Complete Beginner's Guide (2024)

Check Your Eligibility

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Before opening a Roth IRA, verify that you meet the income requirements. For 2024, single filers must have a modified adjusted gross income (MAGI) under $146,000 to contribute the full amount, with reduced contributions allowed up to $161,

Married couples filing jointly can contribute the full amount with MAGI under $230,000, with phase-outs up to $240,
You must also have earned income to contribute, such as wages, salaries, or self-employment earnings.

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Pro Tips

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Keep track of your annual income to ensure continued eligibility

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Consider splitting contributions between traditional and Roth IRAs if you're near the income limit

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Important Warnings

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Contributing when ineligible can result in penalties from the IRS

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Choose a Financial Institution

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Select a reputable financial institution to host your Roth IRA. Popular options include traditional brokerages like Fidelity and Charles Schwab, online platforms like Vanguard and Betterment, or robo-advisors like Wealthfront. Compare factors such as minimum investment requirements, fees, investment options, and customer service. Many online brokers offer commission-free trading and no account minimums.

Gather Required Documentation

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Prepare the necessary information and documentation to open your account. You'll need your Social Security number, driver's license or state ID, bank account information for transfers, and employment information. If you're married, you may need your spouse's information as well. Having these documents ready will streamline the application process.

Open Your Account

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Complete the account opening process with your chosen institution. Most providers offer online applications that take 10-15 minutes. You'll need to create an account, provide personal information, and agree to the terms and conditions. You'll also need to designate beneficiaries for your account. This is an important step that ensures your assets go to your intended recipients if something happens to you.

Fund Your Account

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Set up your initial contribution to your new Roth IRA. You can transfer money from your bank account, set up automatic contributions, or roll over funds from another retirement account. Remember that the annual contribution limit for 2024 is $7,000 ($8,000 if you're 50 or older). Consider setting up recurring monthly contributions to help build a consistent savings habit.