2 Fully Funded Roth IRA's!!! I am getting married in March and I am getting ready to open a Roth IRA for my fiancee. I have already maxed mine out for 2010 and hope to get a big chunk in hers for 2010 from our tax returns!
For those of you that don't know what a Roth IRA is:
A Roth IRA is a retirement account that you contribute to with after tax dollars. Your taxes are removed from your paycheck automatically, so your money after taxes can be deposited into a Roth account.
The benefit of a Roth IRA is that you don't pay taxes again on the gains, assuming you withdraw them after 5 years and the age of 59 1/2. The contributions you made can be withdrew tax free at any time.
2011: I deposit my maximum contribution of $5000 throughout the year. The balance at the end of the year is $5500. Rock on for a 10% gain first off!! I can then withdraw up to $5000 during 2012 with no penalty. The $500 can not be withdrawn until it has been 5 years or you turn 59 1/2.
There are a few exceptions to these rules, but for the sake of basic knowledge this works.
It is a great tool to invest for your future and a good starting point for those just starting out.
If you have any questions about a Roth IRA, do not hesitate to contact me directly.