Few things in recent memory have caught the attention of investors and financial professionals like the Roth IRA. Used properly, it can provide one of the biggest retirement planning opportunities to come along since the traditional IRA was first introduced.

The most attractive feature of the Roth IRA, is that it allows completely tax-free withdrawal of all investment growth after age 59 ½. Additionally, the Roth IRA provides some unique planning opportunities such as early withdrawals for a first-time home purchase, and avoidance of the "Required Minimum Distributions" associated with the traditional IRA.

Here is some basic information you'll need to take into account when considering if a Roth IRA is right for you, as well as the basic steps needed to open one:

A Roth IRA is ideal for investors who are intent on accumulating assets to fund their eventual retirement. Since the Roth IRA has more generous withdrawal rules than the Traditional IRA, it may be a better match for people who might need to withdraw money early, or not at all.

From an income tax standpoint, the Roth IRA will yield the greatest benefit to those people who expect to be in a higher tax bracket during their retirement years than in the present. This benefit arises from the fact that Roth IRA contributions are made with after- tax dollars, and their growth is exempt from later taxation.

For investors with an existing Traditional (tax-deductible) IRA, you are permitted to "convert" some or all of your existing IRA into a Roth IRA. While you will have to pay tax on the amount converted, the remaining balance can now grow tax-free.

Both traditional and Roth IRA's can be invested in a variety of vehicles. Your return will solely depend on the underlying investments. The term "IRA" only indicates the tax treatment of the assets in that account, and is best viewed as an umbrella that protects the growth from annual taxation.

Even though the annual contribution limit has been increased for Roth IRA's, it is still not enough for most people to properly diversify using individual stocks. In the early years of using a Roth IRA, a mutual fund may serve as the most efficient method of diversifying your risk.

By using a discount brokerage firm, you can definitely save some money on your annual IRA fees and investment costs. But you will also be on your own to navigate the complex paperwork and countless investment choices. If you prefer someone walking along side you, you should consider one of the full-service Wall Street firms or a large bank.

After you've selected an institution to house your IRA, you will be provided with an "Adoption Agreement" that looks similar to a bank's new account form. The primary difference with the IRA Adoption Agreement, is that it allows you to name "Beneficiaries" who receive the remaining balance upon your death.

Since your beneficiary designations not only determines who inherits your IRA when you die, but also at what rate they have to withdraw the money, you'll want to choose wisely. If you or your account representative is unfamiliar with the rules, you should consider seeking out the advice of an accountant or attorney.

Once you've opened your Roth IRA, you'll need to put money into it. While you can wait until April 15th of the following year to fund it, you should make a point of starting early. Failure to set aside money each month can lead to an under-utilized IRA.

Choosing the right investments for your IRA is based on your unique needs and risk tolerance. If researching investments is not your strong suit, consider using a balanced mutual fund or seeking out professional help. Try to avoid flashier investments that could experience major losses and derail your retirement plans.

In the event of your death or disability, the paperwork used to establish your Roth IRA will help a family member or executor make timely decisions about the distribution of your assets. Make sure you discuss the location of your important documents with one or more of your trusted advisors.

Additionally, make sure to hold on to the annual Form 5498 your IRA custodian mails you. These may be needed later to avoid taxation on any withdrawals made before age 59 ½.

Here are some additional articles and resources to help you maximize your Roth IRA planning opportunities:

E-PersonalFinance.com IRA Section:

IRS Publication on Traditional, Roth, and Education IRA's: