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 2023, the Roth IRA contribution limit is $6,500, bumped up to $7,500 if you’re age 50 or 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?
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
- A financial advisor can guide you on saving, investing, managing your risk and more. SmartAsset’s free tool matches you with up to three vetted financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- 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.
- Do your research to make sure you’re making the best choice for your retirement needs. Here’s a breakdown of IRAs vs. 401(k)s.
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