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best roth IRA

The best Roth IRAs offer a range of funds, low fees and digital tools to help you plan for retirement. We gathered data on the entire Roth IRA universe and narrowed them down to the best eight. They can suit a range of investors, from the more independent to those who want to leave the investment decisions to a trusted financial advisor.

What Is a Roth IRA and Why Should You Get One?

A Roth IRA helps your retirement savings grow tax-free. Though Roth IRAs offer no tax breaks for contributions, when you’re ready to retire, you can take tax-free distributions  after age 59.5 as long as you’ve held the account for at least five years. For 2019, the Roth IRA contribution limit is $6,000, bumped up to $7,000 if you’re age 50 or older. For 2020, the contribution limit is also $6,000, with a $1,000 catch-up contribution for those 50 and older.

What Type of Investor Are You?

The first six providers we cover may better suit the do-it-yourself investor. These are people who want to set their own asset allocation, pick their investments and re-balance their portfolio as they see fit. On the other hand, you may want to leave the investment decisions to the professionals. Or you’d like to work with a financial advisor to help you build a personalized strategy based on your financial situation and goals. In this case, you may feel better off with the last providers we cover.

Once you know what type of investor you are, check out our list of the best Roth IRAs around. We kick off our list with the best Roth IRA options for do-it-yourself investors.

Charles Schwab

Basic Account Details
Minimum to Open Account – $0
Fees – $0 per online stock trade
Pros – ETF options with no commission fees
Cons – Account closing fees can rise to $50

When you open a Roth IRA, you can choose from a range of funds, including exchange-traded funds (ETFs) with no commission fees. This means your returns can go a bit further at Charles Schwab when your portfolio performs well. And you can open an account with as little or as much as you please. The firm recently dropped its minimum balance requirement. Plus, you’d get several digital tools to help you plan your retirement.

Interactive Brokers

Basic Account Details
Minimum to Open Account – $0
Fees – $0 per trade
Pros Available to any U.S. citizen in the world
– Robust investment menu
Cons Not for rookie investors

Interactive Brokers offers a robust investment menu, including stocks, options, futures and currencies. It also offers margin borrowing. Perhaps its main appeal, though, is its advanced technology, which provides best price execution. Any U.S. citizen can open an IRA with Interactive Brokers regardless of residency. All you need is some basic information to open an account with Interactive Brokers online.

TD Ameritrade

Basic Account Details
Minimum to Open Account – $0
Fees – $0 per online stock trade
Pros – More than 300 commission-free ETFs to choose from.
Cons – Investment minimums for managed portfolios can rise to $250,000

If you open a Roth IRA at TD Ameritrade, you’d get free access to a wealth of digital tools like savings calculators and other features designed to help you plan for your retirement. The firm’s Roth IRA option also stands out for its fee analyzer powered by FeeX. This tool helps you get a clear picture of what you’re paying for if you’re also investing in a 401(k).

You may even find that rolling over into a Roth IRA will save you on plenty of fees.

E*TRADE

Basic Account Details
Minimum to Open Account – $0
Fees – $0 per stock, ETF and options trades
Pros – Digital tools and educational resources for investors
Cons – $25 fees for recharacterizations, refunds and early withdrawals

With an E*TRADE Roth IRA, you’d have access to a substantial amount of fund options, including stocks, bonds, futures and ETFs. You’d also have robo-advisor options and managed accounts run by professional investors you can work with. However, E-Trade stands out for also letting you invest in actively managed funds. These aim to beat the market rather than replicate it as their ETF counterparts do.

Vanguard

Basic Account Details
Minimum to Open Account – $0
Fees No transaction fees for online mutual funds and ETFs
Pros – low fees
– TDF options
Cons – Though there is no minimum to open an account, most mutual funds require at least a $1,000 balance

Vanguard stands out in the asset-management industry for its low fees. In fact, the firm claims the fees on its mutual funds and ETFs are 82% lower than the industry average. It can charge such low fees partly because many of its mutual funds and ETFs are passively managed. The firm is also known for its target-date funds (TDFs), which automatically rebalance based on your age to take on less risk as you get closer to retirement.

Merrill Edge

Basic Account Details
Minimum to Open Account – $0 (for online account)
Fees – $0 per online stock and ETF trades
Pros – wide array of investment options
– Access to award-winning research
Cons – Higher fees and minimums for robo and advisor-guided investing

Merrill Edge offers useful investment research and educational tools you can utilize to save for retirement. And you have virtually the entire fund universe to build your IRA portfolio with. That includes mutual funds, ETFs and even options. Or you can invest in a professionally managed portfolio run by Merrill Edge investing experts. And if you’re a Bank of America customer, you can take advantage of its Preferred Rewards program.

Wealthfront

Basic Account Details
Minimum to Open Account – $500
Fees – 0.25% annual management based on balance
Pros – Automatic portfolio re-balancing
– Digital tools to help you save
Cons – May not be the best for do-it-yourself investors

Wealthfront emerged on to the scene as one of the top robo-advisors out there. It currently reports $10 billion in assets under management. The firm offers a variety of digital tools such as calculators to help you figure out how much you should be socking away to meet your goals. Through its Path service, you can create a personalized savings strategy. You can also take advantage of tax-loss harvesting.

Betterment

Basic Account Details
Minimum to Open Account – $0
Fees – 0.20% average expense ratio on ETFs
– 0.25% annual management fee based on balance (for digital plan)
Pros – Automatic investing and portfolio re-balancing
– Digital tools
Cons – Probably not the best option for people who want a hands-off approach to investing.

Betterment is another leading robo-advisor that aims to open up the world of investing to everyone. It plans to meet this goal with its automated investing service. So when you invest in a Betterment Roth IRA, professional managers run it for you. The firm also keeps fees low. The average expense ratio on its ETFs stands at 0.20%. But you still have access to a large range of investment choices.

How Do You Open a Roth IRA?

best Roth IRA

It typically takes just a few minutes to open a Roth IRA. You may need some basic information like most recent addresses and Social Security number, as well as bank account and routing numbers to make your initial contribution.

Once you’ve gathered these details, the easiest way to open a Roth IRA is to do so online. Simply visit the website of the firm you’d like to work with and go to their retirement planning section. From there, you can usually click on “Open an IRA” to get started. The website will guide you through the process step-by-step. If the firm has physical branches, you can always stop by one of their offices and speak with a retirement planning expert. You can usually find the nearest branch by entering your zip code on their website.

Tips for Retirement Planning

  • At a loss for where even to begin? Our retirement calculator will help you take the firs step of figuring out how much to save in order to meet your retirement goals. We also have a Social Security calculator that will estimate how much you can expect in benefits.
  • Don’t go it alone. A financial advisor can guide you on saving, investing, managing your risk and more. To find a pro who suits your needs, use SmartAsset’s financial advisor matching tool. It links you with up to three advisors, based on your needs and preferences.

Photo credit: ©iStock.com/designer491, ©iStock.com/chrupka, ©iStock.com/Kameleon007

Javier Simon, CEPF® Javier Simon is a banking, investing and retirement expert for SmartAsset. The personal finance writer's work has been featured in Investopedia, PLANADVISER and iGrad. Javier is a member of the Society for Advancing Business Editing and Writing. He has a degree in journalism from SUNY Plattsburgh. Javier is passionate about helping others beyond their personal finances. He has volunteered and raised funds for charities including Fight Cancer Together, Children's Miracle Network Hospitals and the National Center for Missing and Exploited Children.
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