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I was wondering if I could do this, it just seems to make so much sense. You will be earning interest on your I-bond and you won't have to pay taxes until you take out your money during retirement.

But given that any person can't just start a roth-IRA except by going through professionals, i was wondering if using a roth-IRA to avoid paying taxes on treasury bond interest even makes any sense. Which firms could do this for you while charging as small a possible fee? I've read about self-directed IRAs but I'm more interested in whatever is charged for their services.

  • You cannot put an existing I-bond that you already own into an IRA of any kind; contributions to an IRA must be cash only (checks accepted; you don't need to take in a stack. of dollar bills to the IRA custodian's office). You can buy or invest the cash contribution into an I-bond if you like, but this operation must be done within the IRA. – Dilip Sarwate Oct 22 '18 at 13:37
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Most providers allow you nearly anything in your Roth IRA - you put money (cash) in, but then you can invest it anyway you want on whatever is traded in the market.
You often cannot move shares or other investment objects into it; that depends on each company, and where they come from.

It is incorrect that 'most person cannot start an Roth IRA' - just check online with the major providers. All you need is being 18, having an SSN, and an address.
Of course, you will have full responsibility for all losses, if you make poor investment decisions.

  • thanks for clearing this up, so I just assume a Roth IRA is used to hold the interest or dividends from stocks or bonds so that you don't get charged taxes for investing activities? – thinksinbinary Oct 22 '18 at 11:03
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    "All you need is being 18, having an SSN, and an address." Yes indeed, but unless the OP also has taxable compensation for the year of opening a new IRA or contributing to an existing IRA, he/she is not eligible to open/contribute to an IRA, and such lack of taxable compensation could come back to bite the OP in a tender part of his/her anatomy at a later date. – Dilip Sarwate Oct 22 '18 at 13:30
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    yes, @DilipSarwate , and there is also an upper limit for the income, and many other rules he needs to know about; too many to explain without making this answer a novel. But anyone can open an Roth IRA without having taxable income - he/she just can't contribute. – Aganju Oct 22 '18 at 15:08
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I am not sure if there is a minimum age limit to make any type of IRA contribution. However you can contribute to Roth IRA or Traditional IRA only if you have earned income that covers your contribution.

A benefit of treasury securities is that they are exempt from taxation by any State and local governments.

The growth of Roth IRA is tax-free, so holding I-bond in Roth IRA is kind of waste. You should hold I-bond in a taxable brokerage account, or taxable bonds in Roth IRA.

  • "The growth of Roth IRA is tax-free, so holding I-bond in Roth IRA is kind of waste. You should hold I-bond in a taxable brokerage account, or taxable bonds in Roth IRA." Aren't treasury securities still taxable by the IRS? – thinksinbinary Nov 22 '18 at 12:48
  • @thinksinbinary, yes, treasuries are taxed by IRS, but not by state and local. – Xingang Huang Nov 22 '18 at 22:07

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