How to Open a Roth IRA at a Credit Union

Credit unions make saving for retirement convenient and easy. You can set up a retirement account that will draw a certain amount from your checking or savings account each month. You can open a Roth IRA at most credit unions with a small minimum deposit. Credit unions are supervised and insured through the National Credit Union Administration to ensure that your IRA funds are safe through the years.

Walk into your credit union and ask to speak with a new account representative. Explain that you want to open a Roth IRA.

Ask what the minimum initial deposit is and what the minimum subsequent contributions are. You can invest a maximum of $5,000 annually ($6,000 if you are over the age of 50) into an IRA. Minimum contributions depend on each institution but are often as little as $50 to $100. Also ask your representative if there are any fees associated with maintaining the account. (Most credit unions will not have a fee.)

Determine how you want the money invested. Credit unions will allow you to place the contributions into a savings account or a CD. Since this is money you won't be touching for at least five years, don't worry about the time frame and try to lock in the highest rate.

Create an automatic deposit into the account if you want to make regular and consistent contributions. The account representative can help you set up the automatic deductions so that you never forget to put money aside for your future.

Tip

If you think interest rates will be rising, you may want to invest the money in a short-term time certificate so that you can watch and see if rates will indeed go up.

Because credit unions offer only CDs and savings IRAs, they are ideal for conservative investors. Those seeking more aggressive investments such as equities and mutual funds should seek the help of a brokerage firm and investment adviser.

Warning

You must maintain the contribution in the Roth IRA for at least five years and until age 59 1/2. Early withdrawal can lead to tax penalties.

    Warnings

  • You must maintain the contribution in the Roth IRA for at least five years and until age 59 1/2. Early withdrawal can lead to tax penalties.

    Tips

  • If you think interest rates will be rising, you may want to invest the money in a short-term time certificate so that you can watch and see if rates will indeed go up.
  • Because credit unions offer only CDs and savings IRAs, they are ideal for conservative investors. Those seeking more aggressive investments such as equities and mutual funds should seek the help of a brokerage firm and investment adviser.

References

About the Author

With more than 15 years of professional writing experience, Kimberlee finds it fun to take technical mumbo-jumbo and make it fun! Her first career was in financial services and insurance.