Setting up a Roth IRA is easy and so is watching it grow -- tax free.
"IRA" stands for Individual Retirement Accounts. With a traditional IRA, the money you put aside is not taxed until you withdraw it when you retire.
With a Roth IRA, you put in up to $5,000 in after-tax money (the money you get on your paycheck, for example), but the money grows tax free, even if your nest egg doubles or tripples over time.
Any bank can help you set up an account, but for more investment options you can set up a Roth through a stockbroker, discount-broker, financial advisor or mutual fund.
In 2010, Uncle Sam has relaxed income limits so many more people are eligible. And with higher tax rates expected in the future, and recent market losses, this may be the "best time," says financial advisor Sarah C. Tims with RMB Capital Management, to consider converting your traditional IRA, at it's lower value, into a Roth and let it grow tax free from now on.
Also, until April 15th or before you file your taxes, whichever comes first, you can still put money into last year's Roth IRA account, up to the contribution limit of $5,000.