How To Open A Roth IRA: 5 Easy Steps

Opening a Roth IRA might be the single best retirement decision you can make. While Roth IRAs don’t offer immediate tax gratification like other types of retirement accounts, they do give you tax-free growth and you’ll never have to pay any taxes on withdrawals if you follow the rules.

1. Find out if you’re eligible for a Roth IRA

If you’re interested in contributing to a Roth IRA, you have to fulfill two major conditions:

• You must have earned income, such as from a job. (Or your spouse must have earned income, if you want to open a spousal IRA.)
• Your income cannot exceed certain limits.

There’s an income limit that determines whether you can contribute the maximum amount allowed each year (the maximum contribution is $7,500 in 2026, or $8,600 if you’re 50 or older). Above the income limit, there’s also an income phase-out range: If your income falls in that range, then the maximum amount you can contribute will be reduced. If your income tops the higher limit of that range, you can’t contribute to a Roth IRA. (However, it’s possible to wiggle around these income rules by using a backdoor Roth IRA.)

The income limits below apply to your modified adjusted gross income.

For example, if you’re a single filer and your modified adjusted gross income is $110,000 in 2026, you’ll be able to take full advantage of the Roth IRA, since you’re below the $153,000 limit. However, if your income is $155,000, you won’t be able to deposit the full $7,500 maximum contribution. (See this IRS worksheet to calculate reduced contributions for the 2025 tax year.)

Children can contribute to a Roth IRA as long as they have income, perhaps through a lawn-mowing or snow-shoveling business. They’ll need a parent or other adult to open a custodial Roth for them and document their earnings. Parents or grandparents can even contribute the amount of a child’s earnings to a Roth IRA as a gift, as long as the child has earned income. When the child turns age 18 or 21 (depending on how the state they live in defines adulthood), the money in the custodial account can be transferred into a Roth account in their own name.

At the other end of the age spectrum, there’s no age limit on investing in a Roth, as long as you’re still earning money from a job.

2. Figure out how you want to invest the account

Before you consider where to open an IRA, you’ll need to determine whether you want to select investments for the Roth yourself or if you’d rather hire someone to do it for you.

If you’re looking to do it yourself, an online broker might be the best option. But you’ll need to have a solid understanding of investments before you start.

Such advice abounds on the internet for free. You can spend a couple of hours determining the right mix of investments — also known as asset allocation — for your age, time horizon and risk tolerance, or simply select a target-date fund, which has an asset allocation mix suitable for your age and is designed to become more conservative as you reach retirement age. The target date can be 10, 20 or 40 years in the future, ideally when you expect to begin taking withdrawals.

Others may need the help of a professional. A young person saddled with student loans or a young married couple with children may need financial planning with a credentialed advisor, such as a certified financial planner. A financial advisor can also help if you may have trouble staying on course when the market suddenly drops.

Robo-advisors can be a low-cost choice for those who want a “do it for me” solution. Robo-advisors are automated services that create an investment portfolio for you based on your risk tolerance and time horizon — generally for a smaller fee than you would pay for human advice.

3. Pick where you’ll open your Roth IRA

Step three of how to open a Roth IRA is to determine where you will open the account.

Choosing a Roth IRA provider

You can open a Roth account online or in person at any number of places — mutual fund firms, discount brokerages, full-service brokerages, financial planning firms and robo-advisors, to name a few.

Competition among brokerage houses has resulted in commission-free trading, which is a great thing for those just getting started. More of your money stays in your investments instead of going into the broker’s pocket.

Look for a firm that offers commission-free (or no-load) mutual funds or ETFs and charges no fees for account maintenance or account transfers.

Documents you need to open a Roth IRA

You’ll need a few documents on hand to set up your Roth IRA, but generally you can get an account opened in about 15 minutes. You’ll need:

• Government-issued identification, such as a driver’s license
• Your Social Security number
• Bank account details, such as your account number and the bank’s routing number

With these documents you can speed through the process and then connect your bank account to your Roth IRA so that you’re ready to fund it. 

4. Choose investments for your Roth IRA

The next step in opening a Roth IRA is choosing the investments for it, whether you’re doing it yourself or having someone do it for you.

Roth IRAs are most commonly invested in stocks, bonds, mutual funds, ETFs and money market funds. But which do you choose?

Investing based on risk tolerance

Risk tolerance is the amount of risk you’re willing to endure. Some investors want no risk and will choose low-return but less-risky investments, such as CDs or money market funds. Other investors can handle more volatility and will opt for higher-return investments, such as stocks or stock mutual funds or ETFs, which will fluctuate much more over short periods but generally will deliver much higher returns over time than safer investments.

Investors who want to be more conservative should understand that there can be a significant cost to doing so. In general, taking on more risk generally equates to higher returns over the long-term. 

Investing based on when you need the money

Investors with a long time until they need the money — say, five years or more — can afford to invest more in riskier assets that can deliver a higher long-term return. While investments such as stocks and stock mutual funds and ETFs can deliver among the best long-term returns, they can be quite volatile over short periods. You’ll need to ride out the ups and downs in order to earn the strong, long-term returns that these investments can offer. 

In general, financial advisors recommend that investors with a “long investment horizon” take more risk in order to enjoy much higher returns than investors with shorter timeframes. That means investors can be more aggressive, meaning that they allocate more of their money to stocks and stock funds and less to bonds and bond funds. 

In contrast, investors with a short time horizon are usually advised to invest in safer and more stable investments such as bonds and bond funds. Safer investments help ensure that the money is there when you need it. 

Watch out for fund expenses

Whether you’re a do-it-yourselfer or a delegator, you’ll almost always pay an expense ratio for the mutual fund or ETF you choose. If you have a human or robo-advisor offering advice, generally you’ll be paying a fee on top of those investment expenses.

The less you pay in fees, the more money that stays in your account. Higher fees don’t mean better performance and in fact are a handicap to achieving it. There’s nothing wrong with choosing low-cost index mutual funds or ETFs.

Even if you don’t pick investments yourself and hire an advisor, you should review the investment recommendations and inquire about fees.

5. Contribute to your Roth IRA

You can make contributions to your Roth IRA each year, so you’ll want to plan to add to the account over time. It’s not just a one-time thing. 

Strategies for maximizing Roth IRA contributions

Put in a lump sum at the start of the year

It can be valuable to put in a lump sum of money at the start of the year, allowing you to capture a full year’s worth of returns inside the Roth IRA instead of a taxable account.

If you have money sitting in a taxable account, you can transfer your annual contribution as soon as the start of the calendar year of the contribution. 

Contribute to your account each month 

It can make a lot of sense to fit regular IRA contributions into your monthly budget, rather than make the whole contribution in one lump sum. If you can afford to contribute about $625 a month, you’ll reach the $7,500 annual contribution limit (for 2026) in 12 months.

Of course, if you can’t contribute that much, contribute what you can. Regular contributions are a smart strategy, because once you set them up, you don’t have to think about them, and your account will automatically build over time. Plus, if you’re investing regularly you can also take advantage of dollar-cost averaging and reduce your risk.

FAQs

• What’s the best way to invest my Roth IRA?
  

  A Roth IRA gives you a lot of investment options, but those with a long time until retirement should consider being more aggressive with their investments.

  For context, a plain vanilla index fund based on the Standard & Poor’s 500 index has returned about 10% annually on average. But those returns fluctuate a lot from year to year, and stocks can sometimes be volatile.

  How much your account earns depends on both the fees you pay and how your investments perform. Because fees for mutual funds and ETFs are deducted from your account balance, they will act as a drag on your total return. Of course, you’ll accumulate more money if the investments perform well and less if they do poorly.

  The table below illustrates the difference 1 percentage point in return or fees can make in how much an investor accumulates after contributing $500 a month to a Roth IRA for 30 years.

  Portfolio return	Account balance after 30 years*
  *Assumes $500 monthly payments were made at the beginning of each month for a period of 30 years. This Roth IRA calculator can help you see how much you could amass tax-free.
  5%	$417,863
  6%	$504,769
  7%	$613,544

   

• How much money is needed to open a Roth IRA?
  

  Different firms require different minimum investments, but most online brokers or robo-advisors usually have no minimum to open a Roth IRA. Others will waive an account minimum if you set up automatic monthly contributions.

  The annual contribution limit for 2026 is $7,500, up from $7,000 in 2025, so that’s the most you can contribute over the course of a year, though those age 50 and older can contribute an extra $1,100 in 2026, up from $1,000 in 2025.

  But keep in mind that contributions can’t exceed your earned income. That is, the actual contribution limit is the lower of your earned income or the annual limit ($7,500 in 2026). The IRS also allows you to contribute to last year’s IRA up until Tax Day of the following year. For example, you could make contributions for the 2025 tax year right up to April 15, 2026.

• Can you transfer a pre-existing 401(k) into a Roth IRA?
  

  If you have an employer-sponsored 401(k) plan, you can roll over that account to an IRA (Roth or traditional) when you leave your employer. However, the move could create tax liabilities.

  If you’re moving from a traditional 401(k) to a traditional IRA, you generally won’t encounter tax issues, because both accounts are made with pre-tax contributions. Similarly, if you’re rolling over a Roth 401(k) to a Roth IRA, you generally won’t encounter tax issues, since both accounts are funded with after-tax contributions.

  But if you roll from a traditional 401(k) to a Roth IRA, you’ll likely generate taxes. That’s because you’re moving contributions that have never had tax paid on them to an account that requires after-tax contributions. So you’ll have to pay those taxes during the rollover process.

  Here’s Bankrate’s guide on how to roll over your 401(k) to an IRA.