Here are the best Roth IRA accounts available right now
Date: 2020-11-12 02:22:30
Tags for this article:
Article Text:
Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, like American Express, but our reporting and recommendations are always independent and objective.
The best Roth IRA accounts of November 2020
| Brokerage/Robo-advisor | Our pick for | Min. deposit |
|
| Best all around | $0 |
|
| Best for retirement planning | $0 |
|
| Best for active trading | $0 |
|
| Best for mobile trading | $0 |
|
| Best for robo-advice | $0 |
|
| Best for beginner investors | $0 |
|
| Best for goal planning | $500 |
As you start thinking about retirement, you'll likely consider various retirement savings vehicles, namely IRAs, or individual retirement accounts, and 401(k)s. Both retirement plans provide tax-advantaged savings options, but you'll fund your account with pre-tax dollars if you choose a traditional IRA or 401k. Roth IRAs, as well as Roth 401(k)s, are funded with after-tax contributions.
You can set up Roth IRAs through most banks, online brokerages, robo advisors, and other investment apps. As with traditional IRAs, these accounts include an annual contribution limit of $6,000, for those under 50, and $7,000 (people 50 and older).
A clear distinction between the traditional and Roth versions, though, is that Roth IRAs allow you to make early withdrawals without receiving monetary penalty. These retirement vehicles also have no age or minimum distribution requirements.
A good Roth IRA account should offer low fees and/or commissions and provide access to several investment options. When weighing different retirement accounts, you should also check to see if the IRA offers educational resources and retirement planning tools.
Below, we've ordered our top picks for the best Roth IRA accounts. We also list each account's strengths and weaknesses.
How our list compares to other publications
Research is a crucial part of selecting the best Roth IRA accounts, and Business Insider isn't the only website comparing the best retirement accounts. To help narrow down your options, we've compared our top choices with lists from other publications.
| Personal Finance Insider | NerdWallet | Investopedia | |
| Charles Schwab | ✓ | ✓ | ✓ |
| Fidelity | ✓ | ✓ | ✓ |
| Merrill Edge | ✓ | ✓ | ✓ |
| TD Ameritrade | ✓ | ✓ | |
| Betterment | ✓ | ✓ | ✓ |
| SoFi | ✓ | ✓ | |
| Wealthfront | ✓ | ✓ |
The best Roth IRA accounts of November 2020
Best all around
| Editor's rating | 4.9 out of 5 |
| Fees |
|
| Account minimum | $0 |
| Consider it if... | You're looking for free retirement accounts with access to a variety of investments, mobile apps, account types, and retirement resources |
| Open Account | |
Why it stands out:Schwab offers a wide variety of investment options for those with retirement accounts. Roth IRAs – which are free to set up and maintain – include the following investments: stocks, bonds, CDs, ETFs, and mutual funds. Whether or not you set up a Roth IRA here, you can view Schwab's retirement educational content. And you'll receive more retirement-planning resources and tools after you set up your account.
Schwab provides 24/7 customer service, and its website is pretty easy to navigate.
What to look out for: The $0 commission rule doesn't apply to large block transactions that require restricted stock transactions, special handling, trades placed on a foreign exchange, transaction-fee mutual funds, futures, and other fixed income investments.
Best for retirement planning
| Editor's rating | 4.8 out of 5 |
| Fees |
|
| Account minimum | $0 |
| Consider it if... | You enjoy access to retirement planning resources and if you're focused on long-term savings. |
| Open Account | |
Why it stands out: In addition to its Roth IRAs, Fidelity offers several other retirement accounts, including traditional IRAs, rollover IRAs, Roth IRAs for kids, and small business retirement plans. Roth IRAs come without account fees or minimums, and all trades are commission-free.
Fidelity also offers thousands of mutual funds, and the brokerage has a robo-advisor, Fidelity Go, that specializes in automated investing and retirement assistance. Furthermore, it's worth pointing out that Fidelity provides several retirement resources and tools to help you with planning.
What to look out for: If you choose Fidelity Go, you'll pay $0 as long as you've got an account balance below $10,000. You'll incur a $3 robo-advisor fee if your balance is between $10,000 and $49,000, and you'll pay a 0.35% fee if you've got more than $50,000.
Best for active trading
| Editor's rating | 4.8 out of 5 |
| Fees |
|
| Account minimum | $0 |
| Consider it if... | You're a DIY investor who prefers a large selection of investments and account types. |
| Open Account | |
Why it stands out: Merrill Edge's Roth IRAs are completely free to set up. They come without account balance minimums, and they include access to stocks, bonds, options, ETFs, and mutual funds. Another perk of Merrill Edge is that it gives you the choice between three investment platforms: Merrill Edge Self-Directed, Merrill Guided Investing, or Merrill Guided Investing with an advisor.
You'll have access to other retirement accounts, and you can take advantage of 24/7 customer service support and live chat. If you invest in a new Merrill Edge Self-Directed account, you can get up to $600.
What to look out for: Self-directed Roth IRA accounts come with $o trading fees and commissions, but you'll pay more to set up a professionally managed portfolio. For example, Merrill Edge's Guided Investing fees range from 0.45% to 0.85%.
Best for mobile trading
| Editor's rating | 4.8 out of 5 |
| Fees |
|
| Account minimum | $0 ($500 for Essential Portfolios) |
| Consider it if... | You're interested in saving for retirement and making commission-free trades; you like access to multiple apps for trading and investing |
| Open Account | |
Why it stands out:TD Ameritrade's Roth IRAs are free to open; plus, you can choose from among several commission-free ETFs, fixed income investments, and no-transaction-fee mutual funds. You can also utilize educational resources such as exclusive videos and webcasts.
In addition, you can skip out on account fees, and you'll have access to third-party research and analysis from Morningstar Investment Management, CFRA, and Market Edge.
What to look out for: You won't pay any fees for a self-directed Roth IRA. If you choose to use a robo-advisor, though, you'll pay a 0.30% account fee. In addition, TD Ameritrade's managed portfolios are more expensive. Its Essential Portfolios, for instance, have a $500 minimum account size requirement.
Best for robo-advice
| Editor's rating | 4.8 out of 5 |
| Fees |
|
| Account minimum | $0 |
| Consider it if... | You prefer robo-advice and automated investment and retirement management. |
| Open Account | |
Why it stands out:Betterment offers personalized investing and retirement resources to help its users meet specific savings goals. As with the other Roth IRA accounts, you won't have to meet minimum account size requirements, but you will be responsible for an annual fee of 0.25%.
This account also allows you to transfer existing Roth IRAs without tax impact. You'll have access to several socially responsible investment options, and Betterment will automatically rebalance your account and reinvest dividends on your behalf.
What to look out for:Betterment has a limited investment selection; it mainly offers stock ETFs and bond ETFs. The investing platform specializes in automated investment management, so it may not be the best fit for active traders and DIY investors.
Best for beginner investors
| Editor's rating | 4.8 out of 5 |
| Fees |
|
| Account minimum | $0 |
| Consider it if... | You're looking for low-cost Roth IRA accounts, with commission-free trades and access to certified financial planners (CFPs). |
| Open Account | |
Why it stands out: SoFi is a competitive, low-cost choice for those interested in opening a Roth IRA. The company provides both active and automated IRA accounts, and any stock and ETF trades you make are commission-free. Roth IRAs at SoFi also come with free access to certified financial planners (CFPs). And all retirement accounts – whether active or automated – include the option of human advisor consultations.
SoFi also provides several other spending and saving account options, and the company offers several guides, calculators, and resources for account holders.
What to look out for: Besides its cryptocurrency offerings, SoFi primarily offers stocks and ETFs. If you're looking for other investments, such as mutual funds, this advisor may not be the best fit.
Best for goal planning
| Editor's rating | 4.5 out of 5 |
| Fees |
|
| Account minimum | $500 |
| Consider it if... | You're looking for goal-based strategies for retirement and other savings goals |
| Open Account | |
Why it stands out: Though Wealthfront's investment services feature a 0.25% annual fee and $500 minimum deposit, the robo-advisor offers a wide range of account types and investment strategies. In addition to its Roth IRAs, Wealthfront offers traditional IRAs, SEP IRAs, 401(k) rollovers, 529 college savings plans, and multiple taxable accounts. The advisor even offers a high-interest cash account.
If you're thinking of setting up a Roth IRA here, you can do so without paying any trading commissions. You'll also be able to take advantage of goal-based planning and tax-loss harvesting. You'll need a higher account balance to utilize strategies such as stock-level tax-loss harvesting, risk parity, and smart beta tactics.
What to look out for: You can't open a Roth IRA with Wealthfront unless you've got at least $500. You'll also have to pay a 0.25% account fee, and – if you utilize the advisor's low-cost investment funds – you'll pay a 0.13% fee.
Other Roth IRA accounts we considered, and why they didn't make the cut
- Interactive Brokers: You probably won't have trouble finding a suitable account at Interactive Brokers. The brokerage offers the following retirement accounts: Roth IRAs, Roth Inherited IRAs, traditional IRAs, traditional inherited IRAs, traditional rollover IRAs, and SEP IRAs. The only drawback is the cost. You'll need at least $5,000 to set up your Roth IRA.
- Vanguard: Vanguard is also a competitive option for investing and retirement accounts, but you'll need at least $1,000 to get started.
- AllyInvest: AllyInvest requires no account minimums, and it offers commission-free trades on stocks, options, and ETFs. The company also provides several other investment options, but it falls short when it comes to no-transaction-fee mutual funds.
- M1 Finance: This investing platform provides several competitive features – automated investing, fractional shares, and low trading fees – but you won't have access to professional financial planners. You'll also need a $500 initial minimum investment for retirement accounts.
- Blooom: This digital investment advisor specializes in account management for retirement plans. It also has no minimum requirements, but account fees can range from $45 to $250 per year.
Frequently asked questions
Why trust our recommendations?
At Personal Finance Insider, our mission is to help smart people make the best decisions with their money. However, the word "best" is often subjective, so in addition to highlighting the clear benefits of a Roth IRA account – low fees or no account minimums, for example – we outline the limitations, too.
We spent hours comparing and contrasting the features and fine print of Roth IRA accounts so you don't have to.
How did we choose the best Roth IRA accounts?
We reviewed dozens of Roth IRA accounts to determine the strongest options for low fees, investment choices, and retirement planning resources. To make sure we didn't miss anything, we also cross-referenced our roundup against popular comparison sites like Bankrate and NerdWallet.
We also considered whether each financial institution offered self-directed and/or automated retirement accounts. We looked into other factors, including customer service support, mobile access and financial planner access.
What is a Roth IRA account?
Roth IRAs are tax-advantaged retirement savings accounts that allow you to make after-tax contributions without meeting minimum distribution requirements. Whereas traditional IRAs are tax-deferred vehicles that rely on pre-tax dollars, Roth IRAs allow your money to grow tax-free. This means you won't have to pay taxes or penalties on any withdrawals after age 59 ½.
And, as of 2020, you can contribute up to an annual maximum of $6,000 if you're under 50; you can contribute up to $7,000 if you're age 50 or older. The contribution limits are the same for traditional IRAs.
Are Roth IRA accounts worth it?
That depends on your particular financial situation and savings goals. For instance, if you expect to pay more in taxes as you get older, a Roth IRA could be more suitable than a traditional IRA. This is because you'll pay immediate taxes on any contributions you make. Once you reach age 59 ½ , you won't have to pay taxes on any withdrawals. You could incur a large tax bill if you defer your account's taxes until age 59 ½ .
You should also consider setting up a Roth IRA if you're more DIY-minded. That's not to say that you can't also set up an employer-sponsored 401(k), though. You can set up both. The difference, however, is that IRAs typically offer access to more investments.
It's worth noting that 401(k)s feature larger annual contribution limits ($19,500 for 2020).