Whether you’re helping employees set up a Roth IRA (Individual Retirement Account) or you’re looking into establishing one yourself, seek Roth IRA education and training to learn the benefits, conditions and legalities of the savings plan. Because Roth IRA plans have different conditions than traditional deductible IRAs, it’s important to know the distinctions to educate employees choosing between the accounts.

Training opportunities offering Roth IRA information will help you with decisions on Roth IRA contributions, Roth IRA investment choices and Roth IRA rates. Learning how to make the best choices when opening a Roth IRA will help you or your employees have financial peace of mind down the road. Receive specialized training on this type of retirement account by seeking to:

1. Receive formal training from a school or financial institution to increase your knowledge about Roth IRAs and Roth IRA investing.
2. Attend focused seminars on saving strategies and tax techniques that will help you make the most of a Roth IRA account.
3. Find online workshops or materials to learn at your own convenience before you open a Roth IRA or help employees with a Roth IRA conversion.
   

Action Steps
The best contacts and resources to help you get it done

Take classes to become an expert on setting up and managing a Roth IRA account

Learning the finer points of Roth IRA plans will not only help you advise others interested in the retirement account, but will also enable you to analyze each person's financial situation to plan the ideal contributions and investments.

I recommend: Tennessee Credit Union League offers IRA training on two levels, teaching both the basics of IRA plans and contributions and more advanced topics like tax consequences and distributions. Receive training and certification through the program offered by HR Certification. Subjects include documentation, handling loans, distributions and vesting and plan forfeitures.

Sign up for seminars to keep current with Roth IRA info and related tax information

Seek continuing education on Roth IRA issues by attending seminars that concentrate on retirement plans and money management. By regularly attending these workshops, you'll ensure your knowledge of the plan's legalities and tax issues are up to date.

I recommend: Find seminars on Roth IRA plans through Erisa Expertise. Credits for completing the Roth IRA Compliance and Administration and Retirement and Estate Planning seminars may also count toward certain accreditation programs. Learn more about Roth IRA plans and issues through a money management seminar offered by ING Financial Partners.

Find online courses and downloadable materials to learn more about Roth IRAs at your convenience

Online learning opportunities, DVD courses or downloadable literature will help you learn more about self directed Roth IRA accounts or tax issues at your own pace. If you're advising employees about Roth IRAs, obtain materials to create a reference library that they can also access for additional information.

I recommend: Graduate School of Banking offers online IRA training programs that you can take at home or in the office. Topics include legal issues, Roth conversion IRA, beneficiary distributions, reporting, transfers and rollovers. Human resources managers advising employees can obtain training in an online course on IRAs through Train Up.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  If you're attending live seminars on Roth IRAs, inquire about additional types of retirement plans that you or your employees might want to consider. You may discover a different savings option that will benefit employees of different ages and with varied financial situations.

A Roth IRA (Individual Retirement Account) is a savings plan that allows you to make pre-taxed contributions to a retirement plan. The earnings are tax-free, although Roth IRA contributions are non-deductible. Come retirement, qualified withdrawals are also tax-free.

In contrast, a traditional IRA lets you contribute tax-deferred funds. The money grows tax-free and contributions are deductible. However, when funds are withdrawn after the traditional IRA matures, both the initial contributions and earnings are subject to federal income tax. Similarly, a 401(k) is a plan where employers match employee contributions and invest the money for retirement. Both the contributions and earnings are taxed after the 401(k) matures.

A Roth IRA account is the best choice if you plan on being wealthier when you retire than you are today, because the funds you contribute are taxed based on your current earnings.

Once you ask the right questions, and determine that a Roth IRA is for you, go for it. The sooner you invest in a retirement plan the better. Just remember to consider the following:

1. Decide if a Roth IRA furthers your retirement goals.
2. Determine which financial institution offers the best plan.
3. Sign up and start making Roth IRA contributions.

Action Steps
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Check out financial institutions that offer Roth IRA plans

Although banks often accept small accounts, they may not offer as much flexibility as a mutual fund. Mutual funds provide wider investment opportunities to diversify your portfolio. Brokerage firms are another option: they allow you to design your own portfolio with a combination of mutual fund shares and individual stocks.

I recommend: Review the options offered by Scottrade, Fidelity, Charles Schwab & Co. or E*Trade, all of which offer Roth IRAs as part of a diverse investment strategy. Ideally, any relationship you make now will take you right into retirement.

Get the facts on a Roth IRA's terms and conditions

The more Roth IRA information you have, the better. Find out about any fees or required minimum balances. You will also need to know whether or not there is a maximum annual contribution, any Roth IRA rates, and requirements and penalties associated with a Roth IRA conversion.

I recommend: Compile a list of questions to ask. Check out Investopedia to familiarize yourself with common Roth IRA information and criteria.

Make your Roth IRA investment distributions tax-free

Understanding the difference between qualified and non-qualified distributions will save you from paying taxes. A distribution is considered qualified only when it adheres to certain criteria, including age of the account holder and the amount of assets distributed. A non-qualified distribution is one made outside of these specified criteria.

I recommend: Go to Fairmark for a breakdown on qualified versus non-qualified distributions before opening a Roth IRA.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Unlike other tax advantaged retirement accounts, owners of Roth IRAs are not required to withdraw Minimum Required Distributions (MRD) each year after they turn 70 1/2. There is one exception, however: if the Roth IRA account originated from a Traditional IRA. Additionally, if the beneficiary is not a spouse of the owner, then the Roth IRA will be subject to a 50% penalty if the distributions go unmade.

A Roth IRA offers individuals a benefit that is not offered with other traditional individual retirement accounts. Meeting the specific requirements associated with Roth IRAs guarantees that all of the account holder’s earnings will be tax-free when either they or their beneficiary withdraws those earnings. This type of IRA also keeps individuals from having to pay a penalty for early distribution on particular withdrawals. Understanding some of the key terms associated with Roth IRAs will help you make an informed decision when it comes to investing your money.

Action Steps
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Traditional IRA

Traditional IRAs differ from Roth IRAs in that their earnings and deductible contributions are tax-deferred. Account holders are not required to pay taxes until they withdraw their funds. Usually, the withdrawal is made after the individual retires and is in a lower tax bracket. There may be IRS-imposed penalties for early withdrawal. Roth IRA earnings are tax-free if the contribution requirements are met. Contributions, however, are taxed.

I recommend: State Farm Insurance compares traditional IRAs with Roth IRAs.

Roth IRA conversion

Sometimes a Roth IRA proves to be a better means of saving than a traditional individual retirement account. In those cases, individuals have the option of converting all or a portion of their IRA monies into a Roth account. This conversion is done by withdrawing funds from the traditional account and paying taxes on that money. The remaining funds are then used to establish a Roth IRA.

I recommend: AARP offers basic information about Roth IRAs.

Estate planning

Estate planning establishes legal arrangements or procedures for distributing an individual's assets at the time of death or if he or she becomes incapacitated. Roth IRAs - and their beneficiaries - often are part of that planning. That is why it's important to be specific about your plan's beneficiary.

I recommend: Roth IRA Advisor explains the relationship between Roth IRAs and estate planning.

Contribution limits

Generally, contribution limits for Roth IRAs are comparable to those of traditional retirement accounts. In 2007, individuals could contribute up to $4,000 in their Roth IRAs. The maximum contribution was increased to $5,000 in 2008. Those older than age 55 may contribute another $1,000. At no time, however, may contributors put in more money than they earn.

I recommend: IRA regulations, including contribution limits, can be found at Bankrate.com.

Income limitations

Unlike traditional accounts, there are income limitations for Roth IRAs. An individual's eligibility to open one of these accounts depends on his or her income tax filing status and modified adjusted gross income.

I recommend: Fidelity.com provides income guidelines for Roth IRAs.

Distribution guidelines

All Roth IRA distributions are tax-free until an individual withdraws all of his or her 'regular' contributions. From that point on, 'conversion' contributions are withdrawn. Any subsequent withdrawal is taken from the account holder's earnings. These withdrawals also are tax-free if the individual is older than 59 and five years have passed since the IRA was opened. In all other cases, distributions are taxable and subject to penalties for early withdrawal.

I recommend: Fairmark features a quick overview of Roth IRAs.

Roth IRA contributions regulations are constantly changing. From the amount of money that one may invest per year, to what people may invest in are constantly being updated by legislation on the federal level. Take the time to gather Roth IRA information so that you can be sure you are making the best investments possible for your money.

Here are some helpful resources about various IRA products that cover opening and operating a basic IRA, to converting a traditional one, and even opening a Self Directed IRA. Think of this little introductory tutorial as Roth IRAs for beginners.

1. Find Roth IRA information by visiting websites for online stock brokers.

2. Learn about a Roth IRA account that may be converted from a traditional IRA.

3. Educate yourself on Roth IRA contributions that may be "self-directed."

Action Steps
The best contacts and resources to help you get it done

Learn about the parameters of a Roth IRA by visiting brokerage websites online

Brokerages are a great resource for all things financial. And when it comes to explaining the details of a Roth IRA, they are definitely a great resource. They stay on top of the latest rules, regulations and other associated laws and pass that information along for free. Brokerages usually offer very competitive IRA services because they want to establish a banking relationship for the long term.

I recommend: Visit the online brokerage websites for both Charles Schwab and Etrade for information regarding the basic parameters of a Roth IRA account. These will explain things like contribution maximums and who is eligible.

Learn about Roth IRAs and how they may be converted from their traditional form

Roth IRAs were invented after the traditional IRA. Each form of IRA has benefits to different people. The IRA that is best suited to you depends on your overall financial situation. Recently, traditional IRAs have been allowed to be converted to Roth IRAs. Seek the advice of a financial professional to determine if you or your family should roll your traditional IRA to a Roth conversion IRA.

I recommend: Visit the website for Fairmark.com for more information on Conversion Roth IRAs and their parameters. Good Financial Cents.com is also another great resource for understanding the basics associated with a conversion Roth IRA.

Learn about a Roth IRA product called the Self Directed Roth IRA

When it comes to Roth IRA investing, there is another product called a Self Directed Roth IRA. This Roth IRA investment allows the account holder to invest in tax liens, personal loans, private businesses, real estate and more by simply writing a check from the account. Speak to your financial professional to see if the Self Directed Roth IRA makes financial sense for you and your family.

I recommend: Go to the website for Trust Equity Company for a comprehensive overview on the benefits and requirements to open a self direct Roth IRA. Also see Guidant Financial for more information.