Saving for Retirement

Looks like my Roth IRA was finally opened today. I opened a Roth IRA at Citibank online last week. I did a lot of research to find the best deal for the buck.

Why I choose to contribute to a Roth IRA?
I don't earn enough to benefit from contributing into a Traditional IRA. Traditional IRAs in my view are for individuals who are making a lot of money and would benefit by putting money away from pre-tax dollars and thus paying lower taxes when they actually use the money when they retire. Here is a list of benefits of the Roth IRA from Citibank's website:

•	Tax benefits. Although your contributions are not tax deductible, earnings are tax-deferred and withdrawals are free of federal income tax if you're over age 59½.3
•	Compounded earnings. Your contributions may earn interest, dividends, and capital gains, which are then reinvested, so your money has the potential to grow even more.
•	Contributions. Individuals can contribute up to $4,000 for each of the tax years 2005 and 2006. If you're married and filing jointly, the annual cap is $8,000 ($4,000 each) for tax years 2005 and 2006.4
•	Distributions. There's no required age at which you must start taking distributions.
•	Withdrawals. - You can withdraw your contributions any time without paying a 10% federal tax penalty. - You can withdraw earnings without paying federal income tax if your Roth IRA has been open at least five years, and (1) you've reached age 59 ½; (2) in the event of death or disability; or (3) you use the money for a first time home purchase ($10,000 lifetime limit). - In certain circumstances, you can withdraw earnings early without a federal tax penalty.

What was I looking for?
The critieria I used to decide where to open a Roth IRA is as follows: No annual fee, No "custodian" fees, FDIC insured, CD and Money Market accounts, and high interest rates. I researched many banks and found Citibank to be the best deal. Although they do have a $75 fee only if you move the IRA to another bank which I don't plan on doing.

What rates did I get?
I opened with $250 (the minimum amount for a CD) a 6 month CD at 5.50% APY! Their 5 year CD was at the timebeing at 4.60% which is also a great deal. I plan on contributing $250 a month. I can only contribute upto $4000 according to the cap for 2006.