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Feb 15 2010 12:00AM


What is the minimum needed to open a Roth Individual Retirement Account (IRA)? Can the tax be deducted immediately or can it only be done through a tax return?


FPA member Denny Goforth, CFP®, ChFC, CIMA, a vice president and financial advisor with UBS Wealth Management, said the following:

"There should be no 'minimum' to open a Roth IRA account. You should be able to fund a new account with any dollar amount you choose.

"Depending on where you open this account, such as a bank, mutual fund company or brokerage firm, there may be minimum investment requirements for the investment vehicle you choose to use within the Roth IRA account. You should check with the company where you plan on opening the Roth IRA.

"The maximum contribution for both 2009 and 2010 is $5000, unless you are age 50 or older, then the maximum contribution is $6000 for each year. Contributions can be made for 2009 up until April 15th of the following year.

"A contribution to a Roth IRA is never deductible. The Roth IRA is funded with post-tax money and you cannot deduct the contribution from your income. The funds grow tax-deferred and are also tax-free when they are distributed from the account, as long as certain requirements are met.

"You can make a contribution to a regular or traditional IRA and that contribution may be tax-deductible, depending on whether you are covered by an employer-sponsored retirement plan and your income level."

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