Retirement is always at the back of everybody’s minds. It is something that a person long for and dread at the same time. Retirement can be the time to return to pursue hobbies and interests at the same time making you cringe at the thought of getting old. However, retirement can be a pleasant experience if one prepares for this stage religiously. One of the ways to ensure your future is opening a retirement account. Nevertheless, choosing one among the many available retirement accounts can be painstakingly stressful.

Individual retirement account is actually just a collection of your money or earnings. So, why would you even consider opening a retirement account when it is comparable to a simple bank account. The answer is tax incentives. Retirement plans protect you from heavy taxation. Roth IRA rules state that Roth IRA holder are tax immediately at contribution rather than on distribution. This is the main difference between Roth IRA and traditional IRA.

Eligibility for Roth IRA is more strict compared to Traditional IRA. One must be in the income limit set by IRS in order to open an account. In 2010, The Roth IRA income limits for 2010 are $177,000 for married filing joint taxpayers, and $120,000 for single taxpayers.

Roth IRA contribution limits 2011 is still $ 5,000 similar to the previous year. Catch up limit for those aged 50 and above is still the same at $ 1,000. Contribution and catch up limits increase by $ 500 depending on the inflation rates. Financial experts encourage IRA holders to maximize their contributions to fully benefit of the taxes. Roth IRA allows withdrawal of principal contribution anytime and without penalties. Converted accounts also permits distribution after a seasoning period of 5 years. For the past few months, rumor has it that by 2011, Congress will abolish penalty free withdrawal. Well, let us wait and see for more developments.

After familiarizing yourself with the eligibility,contribution and distribution regulations, next is finding yourself an IRA provider that suits your needs. No fee Roth IRA are offered by different financial institutions such as brokerage firms,banks,credit unions and so on

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