Quote:
Originally Posted by hsmama
thanks! so I guess it would work out for what I'm thinking- should I just check with my local bank to open one,or is there a preferred way to open one?
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You can open a Roth IRA type of account just about anywhere. I avoid my local bank because it keeps your options low and/or expensive. For example, many local banks in my area charge big commisions and make it hard to buy mutual fund XYZ.
I guess it depends what you are going to buy in the Roth Account? If you are going to want to buy individual stocks, I would go with TD Ameritrade or Scottrade. Those will work well with CDs and bonds also. Vanguard is good if you just want a lot of diversification and very low costs. T Rowe Price is good if you don't have a lot of starting capital, b/c they let you invest for just $50/month.
Keep in mind also that you can have multiple Roth accounts. The only place your limited is how much total you can contribute to Roth account(s) per year.
The Roth vs. 401(k) (traditional IRA is similar to 401(k) for tax rules) argument to me boils down to 3 things:
1. What tax bracket are you in now?
2. What tax bracket do you realistically expect to be in during retirement age (~60 for tax purposes).
3. Do you expect our government to increase/decrease taxes over time?
Here are the corresponding thoughts:
1. Generally, if you are in a higher tax bracket, its smart to use traditional IRA or 401(k) to shelter some of your income from the higher tax rate. If you are in a lower tax bracket, then Roth all the way and there's no better option IMO.
2. If you expect to be in a high or higher tax bracket at retirement, then the Roth wins again.
3. If you expect the government to increase taxes over time, then the Roth wins again, since it is sheltered from income tax at the time of withdrawal.