How Much Is the Minimum Deposit If You Want to Apply for a Roth IRA?

by Ron White

Opening an Individual Retirement Account allows you to build retirement savings and defer taxes on your IRA contributions. After five years, you can withdraw some money from a Roth IRA without incurring a penalty, as long as you've reached age 60. In addition, you can withdraw up to $10,000 tax-free if you use the money to purchase a home. Many companies offer Roth IRA products. Each company sets its own requirements for the minimum deposit needed to open a Roth IRA.

Company Factor

The company that administers your Roth IRA determines the minimum that you must deposit when you apply to open the account. The minimum varies from one company to another but generally ranges from $500 to $2,000. The Janus Fund has a $500 minimum, while Fidelity requires a $2,500 minimum. T. Rowe Price requires a $1,000 opening deposit to establish a Roth IRA.

Deposit Counts Toward Maximum

The federal tax code limits the amount of money you can contribute annually to a Roth IRA. The maximum contribution is $5,000 per year for taxpayers under 50 years of age; those who are over 50 may contribute up to $6,000 a year into a Roth IRA. The maximum contribution also depends on your modified adjusted gross income. The Internal Revenue Service uses a formula calculate your modified adjusted gross income. Because of the cap, a high minimum deposit will result in less of your monthly earnings being diverted to your Roth IRA.

Waivers

Some companies may agree to waive the minimum deposit requirement in certain situations. At Fidelity, you can make your deposit by transferring or rolling over another IRA account. Fidelity waives the deposit minimum for customers who choose this option. Fidelity and many other companies also waive the minimum deposit for investors who agree to make monthly contributions to their Roth IRAs. The Janus Fund may waive the minimum deposit if you agree to contribute $100 a month during the first year; Fidelity requires a minimum monthly contribution of $200.

Fees

You should have more than the minimum deposit amount saved before you apply for a Roth IRA. In addition to the deposit, you may incur other fees. Some companies charge fees to process your Roth IRA application, although this practice is becoming less common. Some firms also charge a small fee per transaction, ranging from about $5 to $25.

About the Author

Based in Central Florida, Ron White has worked as professional journalist since 2001. He specializes in sports and business. White started his career as a sportswriter and later worked as associate editor for Maintenance Sales News and as the assistant editor for "The Observer," a daily newspaper based in New Smyrna Beach, Fla. White has written more than 2,000 news and sports stories for newspapers and websites. He holds a Bachelor of Arts degree in journalism from Eastern Illinois University.

Photo Credits

  • Ryan McVay/Photodisc/Getty Images