Someone Tell Me About Roth IRAs (New ? on Pg 3)

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Everything I've read recommends opening a Roth IRA. Can someone give me the dumbed down version of why

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Tax free appreciation of capital

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what it is

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a retirement account funded with after tax dollars, that has much more lenient rules on withdrawal of principle than a traditional account.

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and how to begin one?

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Open an account, and fund it. Any of the big trading sites should walk you through it easily.

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My concern is how to distribute it without being a financial expert.

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If this is your biggest concern, just put it in a low cost (vanguard) target retirement date fund. It's the personal finance version of autopilot.

It would probably be good for someone to explain the differences of withdrawing from a traditional and a roth before retirement age. I'm not 100%, but I think:
Roth - Withdraw before 59.5 tax free (you already paid), paying tax on earnings?
Traditional - Withdrawbefore 59.5, get taxed, 10% penalty on earnings, in addition to being taxed on earnings?

Is that right?

How close to retirement are you? What's your risk tolerance? What worries you more - losing money before retirement or not having enough money for retirement? Do you plan to maintain you current living standards during retirement? What other assets and sources of income do you have for retirement? These are questions to start asking yourself because they will ultimately play into your decisions.

A Roth IRA is an individual retirement account that is taxed at your current marginal tax rates (meaning you pay taxes today). By using after tax dollars today, your account grows tax free into retirement. This is opposite of a traditional IRA which is tax deferred (meaning you pay taxes later). The is beneficial if you will be in higher tax bracket later in life (you are paying lower taxes today than you expect that would in the future). It's also beneficial for tax diversification purposes (who the heck knows what taxes will be like in the future).

Most brokers will have an automated questionnaire and a number to call so that someone that can walk you through the process.

If you want to learn more about asset allocation, I recommend reading the following (in order): The Elements of Investing, A Random Walk Down Wall Street, Fail-Safe Investing, and The Ivy Portfolio.

Like Flask recommended, target date funds automatically reallocate to more conservative investments as you get closer to retirement. You should research those.

Unfortunately, there is no fit-all magic right answer. All strategies involve some level of risk and will depend on your personal preferences and situation.

Don't let anyone talk you into investing in products that you don't understand.

Late to this thread it seems, but from the looks of things, all the major points have been covered.

LINK

This breaks it down pretty good.