| You can trade in stocks only through the stock | | | | from your IRA account. |
| brokers. You can open an account only if you are a | | | | The second type of retirement category account is |
| US citizen, or, a resident alien. In both cases you | | | | Roth IRA. This account is similar to the traditional IRA |
| need to provide your valid social security number. | | | | except that you pay taxes on the money you put in |
| You must have become a major, at least 18 years | | | | while you can withdraw money without paying any |
| old in your state of residence before you can apply | | | | tax. Those who are up to the age of 50 can |
| for opening a trading account. | | | | currently contribute up to $5,000 every year and |
| Usually there are four main types of stock trading | | | | those who are up to the age of 70 can contribute up |
| accounts. They are individual accounts, joint accounts, | | | | to $4,000. You should opt for a Roth IRA if you |
| IRAs ---Individual Retirement accounts, and Education | | | | think you will be in a higher tax bracket when you |
| Savings accounts. You have to select one of these | | | | retire. If you invest under a Roth IRA, your |
| accounts according to your personal needs and | | | | investments can grow tax-free. You can withdraw |
| circumstances. You must be ready to deposit a | | | | money after a period of 5 years from the date of |
| minimum of $ 2,500 irrespective of the account you | | | | opening your account without paying any tax with |
| open. You can fund your account via free electronic | | | | the proviso that you have turned 59. The withdrawal |
| transfer directly from your current bank account. You | | | | can also be tax-free if it is used for a first time home |
| can also pay by check or wire transfer. | | | | purchase up to a limit of $10,000. You will, however, |
| The individual investment account can be opened in | | | | have to pay 10% penalty if you withdraw early. |
| the name of one person. Joint account can be | | | | The third type of account in retirement category is |
| opened for two people. It is also mandatory that | | | | Rollover IRA. A Rollover IRA is a holding account. If |
| both the persons should have reached the age of | | | | you transfer funds or stock from a retirement plan |
| majority in their state of residence. | | | | such as a 401(k) or 403(b), the money or stock can |
| The third type of stock trading account is IRA or | | | | be allowed to stay in the Rollover account for a |
| individual retirement account. It is a personal | | | | period of 60 days. Thereafter you will have to place |
| retirement savings account. It offers tax advantages | | | | the funds into another retirement plan. You can |
| to investors. You can deposit a part of your earnings | | | | control your account during these 60 days. It must |
| into a tax-deferred brokerage account. Your | | | | be noted that you cannot avail of this facility more |
| contributions are also tax-deductible. | | | | than once a year |
| Individual retirement account-IRA-- is of three types. | | | | The fourth type of account is Education Savings |
| The first type is traditional IRA. In this account, you | | | | Account or ESA. This account can be opened as a |
| can defer the payment of taxes on your earnings | | | | trust to pay educational expenses of the designated |
| until you start taking the money out. The money | | | | minor beneficiary and no contributions can be made |
| that you put in is tax deductible in the year you put | | | | after the beneficiary has reached the age of 18. The |
| it in. The investors who are up to the age of 50, or | | | | total contributions cannot exceed $2,000. |
| under by the end of the year, can currently | | | | The trading account opening process with a |
| contribute up to $ 5000 every year, but those who | | | | stockbroker is very simple. It can be completed |
| are up to the age of 70 can contribute $ 4,000. | | | | minutes. You can choose your own username and |
| The benefit of investing under the traditional IRA is | | | | password to log into your account and then enter |
| that you do not have to pay any taxes on what you | | | | your personal information. You also need to read and |
| earn till the time you start withdrawing the money. | | | | confirm the account opening agreement. Thereafter |
| This process is known as tax deferment. This | | | | your broker sends you verification email, which you |
| account makes sense because by the time you | | | | have to respond to confirm having received it. This |
| retire, you may be in a lower tax bracket. In that | | | | will ensure that the address you provided was |
| case, you will have to pay less in taxes on earnings | | | | correct. |