A Roth IRA is one of the best retirement accounts in the US, letting you enjoy tax-free withdrawals once you reach retirement age.
Opening a Roth IRA is a fantastic way to start building a nest egg for the future. But with so many financial institutions vying for your business, it can be difficult to decide where to open your account.
We’ve evaluated the best Roth IRA accounts based on their account features, user experience, customer support, and investing tools.
Read on to determine which one could be the right fit for you.
10 Best Roth IRA Accounts
Here are the best Roth IRA Accounts for November 2023:
- Betterment
- Charles Schwab
- Wealthfront
- J.P. Morgan
- Fidelity
- M1 Finance
- Ally Invest
- Merrill Edge
- TD Ameritrade
- Vanguard
1. Betterment
- Best for: Automated Investment Management
- Annual fees: $4 per month or 0.25% advisory fee
- Minimum investment: $10
Betterment was the first robo-advisor to hit the market, and it’s made hands-off investing easy. At least some of your Betterment stock allocations will be invested in value-oriented stocks, allowing you to outperform the market over the long term.
The Betterment platform provides account holders with a wealth of retirement planning tools. You can even pay for one-on-one advice on your personal finances or retirement plans from a certified financial planner (CFP).
With a low $10 initial investment requirement and a reasonable account fee, Betterment is an affordable solution to automated retirement investing, with major benefits like tax-loss harvesting included.
2. Charles Schwab
- Best for: 24/7 Customer Service
- Annual fees: $0
- Minimum investment: $0
Charles Schwab, the world’s largest investment broker, supports all account types, including Roth IRAs. It’s one of our top picks for customer service, with extensive FAQs, online chat, a dedicated retirement services phone line, and in-person assistance at local branches.
Not only does Schwab offer virtually endless investment options, but it also has a robo-advisor, called Schwab Intelligent Portfolios, which lets you mix self-directed investing with a managed option within the same account.
Schwab has no minimum initial investment requirement, and there are no trading fees on stocks, ETFs, options, and thousands of no-fee mutual funds. You can also buy fractional shares for as little as $5.
3. Wealthfront
- Best for: Financial Planning
- Annual fees: 25%
- Minimum investment: $500
Wealthfront is one of the best automated Roth IRA providers. Once you establish your risk tolerance and timeline, you just have to open an account and fund it, then let Wealthfront do the rest.
In addition to enjoying an automated investment account, you get access to a comprehensive financial planning tool and educational resources.
Wealthfront’s investment advice engine projects your net worth over time, incorporates third-party data, and factors in upcoming costs to give you tailored recommendations to reach your financial goals.
While there is a $500 minimum to start investing, Wealthfront’s annual fee is on par with the industry average.
4. J.P. Morgan
- Best for: New Investors
- Annual fees: $0
- Minimum investment: $0
J.P. Morgan’s Self-Directed Investing is our top pick for new investors looking to actively manage their Roth IRA investments on a straightforward intuitive trading platform.
The account comes with unlimited commission-free trades on stocks, ETFs, options, and mutual funds. You can also subscribe to receive market insights from investment experts, access screeners, and watchlists, and easily manage your account on J.P. Morgan’s user-friendly platform.
In addition to Self-Directed Investing, J.P. Morgan offers automated investing and a Personal Advisors package that gives you access to a team of fiduciaries who manage your investments and build a financial plan for you.
INVESTMENT AND INSURANCE PRODUCTS ARE: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
5. Fidelity
- Best for: Active-Investors
- Annual fees: $0
- Minimum investment: $0
Fidelity, the second-largest investment broker, offers services very similar to Charles Schwab.
It provides a full range of investment products and has also added a robo advisor, Fidelity Go. Fidelity offers top-notch customer service, including more than 200 local branches.
There are no minimum balance or minimum initial investments and no trading commissions on ETFs, options, plus more than 3,700 mutual funds.
It’s our top pick for hands-on investors looking to actively trade on a highly-rated mobile app with convenient features like retirement calculators and reporting tools.
6. M1 Finance
- Best for: Customization
- Annual fees: $0
- Minimum investment: $0
M1 Finance is a truly different type of investment platform. It’s built on pies— each pie is its own distinct portfolio that can be filled with up to 100 ETFs, individual stocks, or cryptocurrency, with separate crypto accounts.
M1 offers pre-built pies, but you can also choose the types of investments that make up your pies for yourself.
You get an unlimited number of pies in your account. Once you set up your pies, your funds will be allocated to match the slices in your pie, which you can rebalance at any time with one click.
The platform has also expanded to offer a high-yield savings account, loans, and a premium account with enhanced trading tools.
7. Ally Invest
- Best for: Options Traders
- Annual fees: $0
- Minimum investment: $0
Ally Invest is small potatoes compared to firms like Charles Schwab and Fidelity, but it offers many of the same services — along with a specialty in options trading.
Another big advantage is the broker’s tie-in with Ally Bank, which offers some of the most aggressively priced savings accounts and CDs in the industry.
If you open a Roth IRA with Ally, you can seamlessly add safe FDIC-insured bank investments to your retirement and brokerage accounts.
With Ally, you also get access to 24/7 live customer support.
8. TD Ameritrade
- Best for: Bank Access
- Annual fees: $0
- Minimum investment: $0
TD Ameritrade works like the other brokers on this list, but its connection to TD Bank makes it a great place for your individual retirement account.
It has more than 1,100 branches in 15 East Coast states and a representative from TD is on-site at each branch.
The bank’s branches stay open later than most banks, and its branches open on Sundays. Along with its presence in TD Bank branches, TD Ameritrade has more than 360 local investment branches.
TD Ameritrade investment accounts have no account minimum and no fees on stocks, options, ETF trades, and over 4,000 mutual funds.
9. Merrill Edge
- Best for: Market Research
- Annual fees: $0
- Minimum investment: $0
Bank of America customers who already work with a Merrill financial advisor know about this firm’s excellent financial planning tools.
Anyone can open a Roth IRA and start investing with Merrill Edge. Along with low fees, Merrill has some of the best market research in the industry.
This research includes a “fund story” for mutual funds which lets you see exactly what makes up the fund before you invest.
Merrill Edge also has no minimum opening deposit or fees on stocks, ETFs; and around 2,700 no-fee mutual funds; options cost 65 cents per contract.
10. Vanguard
- Best for: Investing in Funds
- Annual fees: $25; waived with e-statements
- Minimum investment: $0
Vanguard offers some of the biggest and most popular funds in the investment universe. The company is so well-respected that its low-cost funds appear in almost every robo-advisor portfolio in the industry, as well as many traditional advisor-guided portfolios.
Unfortunately, Vanguard isn’t the best broker choice for trading individual securities, with a more basic platform and limited trading tools.
Vanguard offers actively managed portfolios and Vanguard Digital Advisor, a robo-advisor service.
How Does a Roth IRA Work?
Roth IRAs work like traditional Individual Retirement Accounts in most respects. Anyone who earns income from work can open a Roth IRA and contribute retirement savings.
Both kinds of IRAs have tax benefits. With a traditional IRA, you can deduct the money you deposit (up to the $6,500 contribution limit) from your earned income at tax time.
With a Roth IRA, you do not get this tax benefit, but you will be able to withdraw money tax-free after you reach retirement age.
As long as you’re at least 59 ½, and have participated in a plan for at least five years, your withdrawals from a Roth IRA – both contributions and accumulated investment earnings – can be withdrawn without incurring income tax.
Roth IRAs also have an annual IRA contribution limit of $6,500 ($7,500 if you’re 50 years old or older).
Roth IRA contributions are subject to income limits. If your income reaches or exceeds those limits, your contribution will either be limited or completely disallowed.
Every year or two, the IRS changes these income limits and IRA contribution limits.
Traditional IRA vs. Roth IRA
When it comes to a Traditional IRA vs. a Roth IRA, the main differences are as follows:
- Contributions to a traditional IRA are generally tax-deductible; contributions to a Roth IRA are not.
- Retirement withdrawals from a traditional IRA are taxable as ordinary income; retirement withdrawals from a Roth IRA are free from ordinary income tax.
- Roth IRA contributions can be withdrawn at any time, free from taxes and the 10% early withdrawal Withdrawals taken from a traditional IRA before age 59 ½, are subject to ordinary income tax and the 10% early withdrawal penalty.
- Traditional IRAs are subject to required minimum distribution limits (RMDs) beginning at age 72; Roth IRAs are not.
Where to Open a Roth IRA
There are several types of Roth IRA platforms to choose from. Here’s a quick overview of your options.
Self-Directed Roth IRA Investment Brokers
If you prefer to choose and manage your own investments, go with an online broker.
By working with a diversified investment broker, you’ll be able to choose from individual stocks, bonds, options, mutual funds, ETFs, and many other investments. You’ll have the most control over your retirement savings account.
A good investment broker will have a combination of:
- Low or no transaction fees to help you meet retirement goals sooner.
- A wide selection of investment options.
- Plenty of investor tools and resources to help even new investors find success.
Roth IRAs With Robo-Advisors
If you want to start retirement planning without learning the nuances of investing, consider a robo-advisor.
Robo-advisors create a portfolio and then fully manage your account online, automatically reinvesting dividends and periodically rebalancing to maintain your target asset allocations.
Because they rely on computer algorithms instead of human knowledge, robo-advisors can manage your portfolio at a fraction of the cost you’d pay a human financial advisor.
As robo-advisors have grown, many platforms even offer specialized investing strategies.
Roth IRA Fund Investing
You can also choose to open your Roth IRA account with a fund family that offers mutual funds and exchange-traded funds.
Each of these funds represents a pre-selected, professionally managed portfolio of related stocks. You can even invest in index funds that match the general market.
Funds can be actively managed in an attempt to outperform the market or passively managed to match the market.
Frequently Asked Questions
What are the benefits of a Roth IRA?
The primary benefit of a Roth IRA is that withdrawals are tax-free. And since Roth IRA contributions aren’t tax-deductible, they can be withdrawn at any time before reaching 59 ½ without being subject to ordinary income tax or early withdrawal penalties.
In addition to their tax advantages, Roth IRAs are also not subject to required minimum distributions (RMDs).
Can I change my traditional IRA to a Roth IRA?
Yes, you can convert your traditional IRA into a Roth IRA, but there is a catch.
You have to pay taxes on the money you move into the Roth IRA since Roth IRA contributions come from after-tax dollars and the money in your traditional IRA was never taxed.
Can I convert my 401(k) to an IRA?
Employers manage 401(k) accounts on behalf of their employees. If you’d like to move your 401(k) into an IRA, ask your broker about a rollover.
In many cases, a rollover is tax-free, although rolling a traditional 401(k) into a Roth IRA will expose your savings to taxation.
Can I contribute to a Roth IRA if I have a 401k or Traditional IRA?
Yes, you can contribute to a Roth IRA even if you have a 401(k) or traditional IRA. There are certain eligibility requirements and limits to consider, but it’s indeed possible.
A Roth IRA offers different tax advantages compared to a traditional IRA or 401(k), so it may be beneficial to diversify your retirement savings by contributing to a Roth IRA alongside your other accounts.
How much do I need to open a Roth IRA?
Each financial institution has its own requirements, so the amount you need to open a Roth IRA may vary. Some institutions have no minimum investment requirement, while others may require a certain dollar amount.
It’s important to research and compare different providers to find the one that aligns with your financial goals and budget.
Should I Open A Roth IRA?
Generally speaking, a Roth IRA is recommended for those who expect to be in a relatively high tax bracket in retirement.
If you have retirement income from multiple sources, you may be in a higher tax bracket than you expect. A Roth IRA can provide tax-free distributions that will lower your tax liability.
It’s also an excellent choice if you think you may need to access the funds in your account before retiring.
Finally, a Roth IRA is a recommended strategy if you’re concerned about outliving your retirement savings.
If you decide a Roth IRA is right for you, consider opening an account with one of the reputable brokerages in this guide.
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