Best Roth IRA Accounts for April 2024
- Best for Self-Directed Investors: Fidelity Investments
- Best for Self-Directed Investors: Charles Schwab
- Best for Self-Directed Investors: Merrill Edge
- Best for Hands-Off Investors: Wealthfront
- Best for Hands-Off Investors: M1 Finance
- Best for Hands-Off Investors: Betterment
Best for Self-Directed Investors : Fidelity Investments
- Account minimum: $0
- Fees: $0 for stock/ETF trades, $0 plus $0.65/contract for options trade
- Online tools: Chatbot and robo-advisor but navigation can be challenging
- No Roth IRA account minimums
- Online support via chatbot can address a wide range of inquiries
- Wide variety of educational articles and retirement planning features
- Investment management flexibility includes robo-advisor, self-directed, and advisor-guided options
- No futures or commodities trading ability
- Navigating certain features and tools can be challenging
- Non-U.S. citizens or non-residents blocked from account opening
In addition to the extensive array of self-directed investment options, you can also leverage advisor-guided and digital investment advisor portfolio management strategies. You’ll find that this blend of investment management flexibility combined with Fidelity’s retirement calculators, tools, and reporting features gives a powerful edge to retirement savers at every life stage and level of market experience.
Those just getting started on their retirement journey have access to excellent educational content in a variety of formats that complement effective tools for a more holistic approach to investing. Fidelity provides withdrawal calculators and incorporates Social Security distributions that give better insight into your retirement income approach if you're closer to retirement. Overall, investment management flexibility paired with outstanding tools and low costs makes Fidelity one of the premier places to hold your Roth IRA.
Fidelity has been headquartered in Boston, Massachusetts since the founding of Fidelity Management & Research Company in 1946.
Read the full Fidelity Investments review.
Best for Self-Directed Investors : Charles Schwab
- Account minimum: $0
- Fees: Free stock and ETF trading, $0.65 per options contract
- Online tools: Schwab Intelligent Portfolio robo-advisor
Charles Schwab offers a strong platform for Roth IRA accountholders given the variety of investment choices, trading tools, and portfolio management options you’ll have at your disposal.
- Detailed ETF screening, research, and analysis
- No transaction fees applied to ETF trading
- Choose from Schwab Intelligent Portfolio robo-advisor, self-directed, or advisor managed investment strategies
- No direct investments in cryptocurrencies
- Mutual fund costs and margin rates higher than some competitors
- $5,000 minimum, $25,000 for premium in the Schwab Intelligent Portfolio
Schwab particularly stands out for its extensive ETF screening capabilities. Financial advisor-driven portfolios and the Intelligent Portfolios robo-advisor offering are also available if you’d rather have a less hands-on investment management strategy.
Schwab also gives you access to a considerable volume of market data and investment research to help you make more informed portfolio decisions. Financial calculators and other planning tools are located in the advice section of the platform. They can be tailored to your age, financial situation, and background, giving you even more confidence that you’re on track for retirement. All these features are designed to give you more control and insight wherever you are on your retirement journey. Founded as Charles Schwab & Co. in 1971, Charles Schwab is headquartered in Westlake, Texas.
Read the full Charles Schwab review.
Best for Self-Directed Investors : Merrill Edge
- Account minimums: $0
- Fees: $0 per stock trade. Options trades $0 per leg plus $0.65 per contract
- Online tools: Retirement Evaluator and Fund Story tools; robo-advisor
Merrill Edge offers many different types of investment tools and fund options, along with extensive educational materials centered around retirement planning, highlighting its strength as a Roth IRA provider. The Retirement Evaluator and Fund Story tools in particular combine a long-term planning outlook with detailed portfolio analysis so you can get a better sense of your retirement preparedness.
- Tailored portfolio analysis for Bank of America accounts
- Fantastic educational material, investment tools, and retirement planning
- No minimums for self-directed Roth IRA accounts
- Narrow product line-up
- $1,000 minimum for Merrill Guided Investing; $20,000 minimum for Merrill Guided Investing with Advisor
Read the full Merrill Edge review.
Best for Hands-Off Investors : Wealthfront
- Account minimum: $500
- Fees: 0.25% for most accounts, no trading commission or fees for withdrawals, minimums, or transfers
- Online tools: Goal tracking, integration features, and digital planning tools
- Intuitive and innovative retirement planning tools
- Excellent account aggregation functionality
- Self-Driving Money and Path features
- No access to financial advisors
- No self-directed portfolio options
- No live chat
Read the full Wealthfront review.
On Nov. 3, 2023, Wealthfront increased the APY on its Cash Account from 4.80% to 5.00%.
Best for Hands-Off Investors : M1 Finance
- Account minimum: $100 ($500 minimum for retirement accounts)
- Fee: 0%
- Online tools: Minimal digital planning tools; no available human advisors for backup
- Zero fees incurred for account management and trading
- Superb range of investment selections, customization, and portfolio automation options
- Fractional shares supported
- Minimal financial tools, calculators, and goal-tracking features
- No external account aggregation for investment allocation purposes
- Human financial advisors not available for additional retirement help
You won't just have access to save, spend, and borrow products at M1 Finance. You’ll also be able to take advantage of a unique investment management solution that supports extensive portfolio customization while putting the management strategy on auto pilot. The ability to both tailor and automate lets retirement savers invest according to their preferences while giving peace of mind.
You can choose from over 80 pre-built portfolios (called “pies,'' a nod to portfolio pie charts) when you invest your Roth IRA through M1 or build-your-own allocation. Either option is available to you with no trading costs or asset management fees. The biggest addition M1 Finance has made recently is the introduction of cryptocurrency trading, which can be managed and automated using the same pie interface.
If you’re looking for additional help preparing for retirement, however, what you won't find at M1 are human advisors or digital planning tools. The experience is best suited for self-directed investors looking to automate their preferred portfolio strategy while maintaining access to other money management tools. Founded in 2015, M1 Finance is headquartered in Chicago, Illinois.Read the full M1 Finance review.
Best for Hands-Off Investors : Betterment
- Account Minimum: $0; $10 to get started
- Fees: 0.25% (annual) for investing plan accounts with at least $20,000 or at least $250 per month in recurring account deposits. Otherwise, the fee is $4/month. An additional 0.15% (annual) fee on accounts with at least $100,000 in assets provides account holders with unlimited access to certified financial planners. This additional fee is applied to assets in the investment and cryptocurrency accounts, but not cash accounts. For accounts with at least $2 million, there is a fee discount of 0.10%. Crypto accounts are charged a monthly fee of 1% plus trading expenses.
- Online tools: One the first robo-advisors in the industry
Paid non-client of Betterment. Views may not be representative. See more reviews at the and . about this relationship.
Pros & Cons
- No Roth IRA account minimums
- Portfolio tools and planning functionalities easy to navigate
- External account aggregation for the entire picture of your retirement
- Seamless account setup and portfolio transparency before depositing
- No self-directed retirement investment options, assets limited to ETFs
- Margin account and borrowing products not available
- $100,000 required for Premium plan
- No direct REIT exposure in robo-advisor portfolios
Read the full Betterment review.
Final Verdict
Fidelity Investments gets a thumbs-up from us thanks to its educational tools and guidance features, including articles and a very knowledgeable chatbot that can field a nice selection of questions. It offers management flexibility and there are no account minimums. And it offers much more than mutual funds with several other retirement options available.Company | Platform Type | Fees | Account Minimum |
---|---|---|---|
Online Brokerage | $0 for stock/ETF trades, $0 plus $0.65/contract for options trade | $0 | |
Online Brokerage | $0 for stock/ETF trades, $0.65 per contract for options | $0 | |
Online Brokerage | $0 per stock trade. Options trades $0 per leg plus $0.65 per contract | $0 | |
Robo-Advisor | 0.25% for most accounts, no trading commission or fees for withdrawals, minimums, or transfers; between 0.42%- 0.46% for 529 plans | $500 | |
Digital Wealth Management | 0%; $36 per year for M1 Plus ($3 month, 3 months free for new users) | $100 ($500 minimum for retirement accounts) | |
Robo-Advisor | 0.25% (annual) for investing plan accounts with at least $20,000 or at least $250 per month in recurring account deposits. Otherwise, the fee is $4/month. An additional 0.15% (annual) fee on accounts with at least $100,000 in assets provides account holders with unlimited access to certified financial planners. This additional fee is applied to assets in the investment and cryptocurrency accounts, but not cash accounts. For accounts with at least $2 million, there is a fee discount of 0.10%. Crypto accounts are charged an annual fee of 1% plus trading expenses. | $0; $10 to get started |
Why You Should Trust Us
Investopedia collected and analyzed several key data points from over 43 online brokerage and digital wealth management companies to identify the most important factors for readers choosing the right Roth IRA to fit their needs. We used this data to review each company for their financial services, calculators and tools, and other features to provide unbiased, comprehensive reviews to ensure our readers make the right decision for their needs. Investopedia launched in 1999, and has been helping readers find the best Roth IRA accounts since 2019.
Roth IRA Tax Benefits vs. Traditional IRAs
A Roth IRA offers several tax benefits that make it an attractive option for retirement savings:
- Tax-Free Withdrawals in Retirement: One of the primary advantages of a Roth IRA is that qualified withdrawals in retirement are entirely tax-free. This includes both contributions and earnings, providing retirees with a tax-efficient income source.
- Tax-Free Growth: Within a Roth IRA, investments can grow tax-free. Unlike traditional IRAs or 401(k)s, where contributions are tax-deductible but withdrawals are taxed, Roth IRAs allow your investments to compound over time without incurring taxes on capital gains or dividends.
- No Required Minimum Distributions (RMDs): Roth IRAs do not have required minimum distribution (RMD) obligations during the account holder's lifetime. Traditional IRAs and 401(k)s mandate minimum distributions starting at a certain age, but Roth IRAs offer greater flexibility, allowing individuals to manage their withdrawals according to their financial needs.
- Tax-Free Withdrawals for Qualified Expenses: Roth IRAs allow penalty-free withdrawals of contributions (not earnings) for specific purposes before retirement. This includes qualified first-time home purchases and certain educational expenses, providing added flexibility for life's significant financial milestones.
- No Age Limit for Contributions: Traditional IRAs restrict contributions after the age of 72, but Roth IRAs have no age limit for contributions, allowing individuals to continue contributing as long as they have earned income, fostering continued growth and tax benefits.
- Estate Planning Benefits: Inherited Roth IRAs continue to offer tax-free withdrawals for beneficiaries, provided certain conditions are met. This can be advantageous for passing on assets to heirs while minimizing tax implications.
Bottom line: Roth IRAs provide compelling tax benefits. However, it's essential to note that contributions are made with after-tax dollars. Therefore, individuals should evaluate their current and future tax situations to determine if the tax-free withdrawals in retirement outweigh the upfront tax payment.
Frequently Asked Questions
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What is the 10 Year Roth IRA Rule?
The Setting Every Community Up for Retirement Enhancement Act of 2019, better known as the SECURE Act, requires that designated beneficiaries, which are not eligible designated beneficiaries, must withdraw the entire inherited IRA account by the 10th calendar year following the year of the employee or IRA owner’s post-2019 death. The Act also requires that non-designated beneficiaries must withdraw the entire account within five years of the employee or IRA owner’s death if distributions have not begun before death
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Can You Have Two IRAs?
Yes, you can have multiple IRAs. There are two main types of IRAs: Traditional and Roth. You can have both types simultaneously, but the total annual contribution limit applies across all your IRAs.In 2023, the combined contribution limit for both types of IRAs was $6,500 (or $7,500 if you're 50 or older). For 2024, the limit is $7,000 ($8,000 if age 50 or older). These limits apply to your combined traditional and Roth IRA contributions. -
How Do You Qualify for a Roth IRA?
Single taxpayers must have a modified adjusted gross income (MAGI) under $138,000 to make the maximum Roth IRA contribution. The contribution amounts are reduced as your income nears $153,000, at which point you no longer qualify for a Roth IRA. The full contribution is available to married taxpayers who file jointly up to MAGIs of $218,000 with reductions to a complete phase out at $228,000.
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How Does a Roth IRA Grow?
A Roth IRA grows like every other investment account: through the magic of compounding. Your contributions to a Roth IRA are invested to earn interest and that interest helps to increase your overall portfolio balance, helping you to earn more interest. The more time your money has in the market, the better the opportunity for greater returns becomes over time.
The money in a Roth IRA can continue to grow even after you stop making contributions because the ongoing returns continue to add to the balance and get reinvested. The financial institutions reviewed for this article all provide resources and guidance on diversifying a portfolio to ensure the right balance of risk and reward to intelligently grow your retirement savings in a Roth IRA. -
Why Should You Consider a Roth IRA?
The tax benefits of a Roth IRA make it a powerful alternative to the traditional IRA because contributions are made with after-tax dollars. The tax on the money in your Roth IRA is already paid, so there is no tax owing when you withdraw your money. And you won't pay capital gains on it in retirement as long as you keep to the qualified distribution guidelines.
While many people choose to take the deduction now and pay taxes on retirement savings when they withdraw funds in the future, this strategy can be disadvantageous if you have income from other sources in retirement. -
Can I Use a Roth as an Emergency Fund?
An often overlooked feature of a Roth IRA is its ability to operate as a de facto emergency fund. You’re making contributions with after-tax dollars so you can withdraw those contributions without any tax implications. But this only applies to the amount contributed. Any earnings on that money must stay in the account until you can make a qualified distribution.
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Do Roth IRAs Have RMDs?
One huge advantage to structuring your retirement account as a Roth IRA is that there are no required minimum distributions (RMDs). You can simply leave the money in the Roth IRA if you don’t need it immediately in retirement. The money would transfer to your designated beneficiary should you pass away before fully using up your Roth IRA. The same rules apply to you (no taxes or RMDs) if your spouse is your beneficiary. A Roth IRA can be passed on to your heirs without incurring estate taxes, although there are some rules around how and when they have to start drawing the account down.
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How Much Do You Need to Open a Roth IRA?
Most brokerage platforms that offer Roth IRAs do not require a fee or minimum deposit to open an account. Investors considering a Roth IRA for their retirement needs should conduct their research; not all brokerages are fee-free and some may even require a minimum deposit.
For example, Lightspeed requires a $20 opening fee and a minimum monthly commission. Lime Financial may require a $50 annual fee, although the brokerage states it can be waived if specific requirements are met. Roth IRAs are a great way to save for retirement, but the best Roth IRAs do not charge fees and have no minimums to open an account, which is what investors should look for to gain the full advantages of a Roth IRA.
How We Picked the Best Roth IRA accounts
Investopedia is dedicated to providing investors with unbiased, comprehensive reviews and ratings of online brokers and robo-advisors. Our reviews are the result of a thorough evaluation of all aspects of these platforms, including usability, account and research amenities, educational content, available products, costs and fees, security, mobile experience, and customer service. Our last assessment for inclusion in this Best Roth IRA Accounts article was performed in April 2022.Dotdash Meredith receives cash compensation from Wealthfront Advisers LLC (“Wealthfront Advisers”) for each new client that applies for a Wealthfront Automated Investing Account through our links. This creates an incentive that results in a material conflict of interest. Dotdash Meredith is not a Wealthfront Advisers client, and this is a paid endorsement. More information is available via our links to Wealthfront Advisers.
Guide to Roth IRA Accounts
Learn more about Roth IRA accounts:
Roth IRA: What It Is and How to Open One
How Can I Fund a Roth IRA If My Income Is Too High?
How to Use Your Roth IRA as an Emergency Fund
How a Roth IRA Works After Retirement
How to Open a Roth IRA in 5 Steps
How Converting to a Roth IRA Can Affect Taxes
What Fees Do You Pay in a Roth IRA?
How Do I Roll Over a SIMPLE IRA to a Roth IRA?