How do Roth IRAs work? Do they really double everything every year?
No, they don’t guarantee to double your money every year. A Roth IRA is a tax advantaged retirement investment account. You contribute your after-tax dollars to the account and invest the money. You can choose to invest in stocks, mutual funds, bonds, cds, etc. Good investments will increase in value over time. When you retire, you can withdraw the money from the account tax free (because you already paid taxes on your contributions.) There are limits to how much money you can invest in an IRA. If you meet certain income requirements, you can contribute up to $4,000 in 2007 and that increases to $5,000 for 2008. If you exceed the income requirements, you can contribute less than that, or possibly none at all. But if you don’t qualify for a Roth IRA, you can contribute to a Traditional IRA instead. For more information, check out the link below.
