How To Open a Roth IRA | Financial Advisor Live Walkthrough

Guys, I am SO excited about this because a Roth IRA is one of the most tremendous wealth-building tools at your disposal!

As a refresher, a Roth IRA is what’s called a “tax-advantaged retirement account,” which just means that there is a tax incentive for utilizing that account. More specifically, it offers the potential for tax-deferred growth and tax-free distributions in retirement! And that’s why we love it—it is a wealth-building supercharger! The way this works is that dollars contributed to a Roth IRA are taxed on the front end when you earn them. Then, when you contribute, those dollars grow, and when you take them out in retirement (or after age 59½), they are completely tax-free.

But with that, there are some rules and restrictions in place. The government realizes how powerful these dollars are, and so they restrict how much you can contribute. As of 2025, Roth IRAs have an annual contribution limit of $7,000 for those under 50, while those over 50 can contribute a total of $8,000. But not only do they restrict how much you can contribute, they actually restrict who can contribute based on your income.

In 2025, single filers making more than $150,000 a year start to have additional restrictions on how much they can put into a Roth, and those making more than $165,000 a year can’t even put money directly into a Roth at all. If you want to have everything we covered in one place, in addition to getting the married filing jointly and married filing single numbers, we have a tax guide available at moneyguy.com/resources that you can check out right after this video. If this is you, there are still some strategies you can employ, but we’ll talk about that in another video. Either way, you’ll need to have one open whether you’re directly contributing or using a different strategy, which is what this video is all about.

So with that, we can talk through the conceptual stuff all we want, but let’s get to brass tacks: how do you actually open and contribute to a Roth IRA? Let’s walk through it right now.

For this example, we’re going to use Fidelity, but the process is largely similar across most providers. Go ahead and log in or make an account—it’s a pretty straightforward process.

Then you’re going to see “Open an Account.” It’ll take you to this screen, and under “Retirement and IRA,” we’re going to select “Roth IRA” in the middle. From there, it’ll have you review your account information, and then at the bottom, you want to click “Open Account.” That’s it! And if you’re wondering if it’s really that easy—yes, it really is that easy!

Once you’ve got the account open, now you can start making your contributions. If you do want to make manual contributions to your Roth IRA, you may need to make one additional selection when you contribute, and that’s your “contribution year.” Remember, for Roth IRAs, you can actually contribute all the way up to the tax filing deadline for last year. That means that up until April 15th of 2025, you can still make contributions for 2024.

However, we really like a “set it and forget it” approach—one that can automate your wealth building so that you can actually focus on the things that really matter. If you do this, the contribution will automatically count for the year that you are contributing in.

To do this within Fidelity, you can go to your Roth IRA’s page and find the callout titled “Automate your IRA contributions.” It’ll have you link your bank account and select how much you want to transfer and when you want the transfer to take place. If you want to max out the annual contribution, that would be $7,000 right now for those under 50. If you want to spread it out though, you would want to select $583.33 per month, or if you want to do it weekly, $134.61 each week.

So when it comes to key takeaways here, it’s really just to get started. Simon Sinek, an author and speaker, famously said, “The hardest part is starting. Once you get that out of the way, you’ll find that the rest of the journey is much easier.” And that can quite often be true for your financial journey as well. Once you get the ball rolling and just have the system set up to succeed, you’re that much closer to building wealth for yourself.

And again, all you have to do is set it and forget it, which has a few major benefits—namely that automating makes it easier on you. Once you set up a system and make the good habits easy, you’re much more likely to stick with it and make progress towards your goals. It can also take a lot of the guesswork out of trying to time the market, which is a big mistake a lot of new investors make. And there’s a good chance it’ll cause you to really save more than you would have otherwise.

It’s not just a catchy feel-good phrase, but it can actually make a tangible difference if you just set it and forget it. Richard Thaler and Shlomo Benartzi, the two behavioral economists behind the “Save More Tomorrow” or “SMarT” Plan, found that participants who committed to automatic gradual increases in contributions actually saved an average of 10-13.6% of their income, compared to just 3.5% for those who didn’t automate.

And with that, you want to make sure that you keep improving, keep saving better, keep improving your savings rate. Since Roth IRAs aren’t tied to any employer, there’s no automatic increase in contributions, so you’re going to be responsible for it. And don’t forget this step! At the beginning, pick an amount that you can consistently stick with, but don’t leave it there. Every month, every year, whatever works for you, increase those contributions—maybe 1%, maybe 2%, maybe $50, maybe $100.

With that, we hope you guys enjoyed this one! Leave a like if you haven’t already, and let’s get that wealth-building train rolling!