How and Where to Open a Roth IRA - NerdWallet
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How and Where to Open a Roth IRA

If you’re considering opening an IRA, and have heard that opening a Roth IRA in particular is the way to go, NerdWallet lays out how to select the right Roth IRA provider, then get started signing up if it’s the right retirement planning decision for you.

Roth IRA is short for a Roth Individual Retirement Arrangement, and it is a tax-advantaged savings account that you can sign up for – independently of any employer or group plan – to help save for retirement without having to get taxed as much as you would otherwise.

Where to Open an IRA Account

NerdWallet’s Top Picks for IRA Accounts:

Best Overall Value IRA

  • Mutual Funds & ETFs: 1,300+ no transaction fee mutual funds and over 90 commission-free ETFs
  • Customer Service: 28 local branches, weekday phone support and 24/7 online chat
  • Account Fees: $60 account closing fee
  • Account Minimum: None
  • Stock Commissions: $9.99
  • Learn more about E*Trade
Get started
Best IRA for Inexpensive Stock Trading

  • Mutual Funds: $9.95 to buy/sell
  • Customer Service: Available business hours on weekdays only
  • Account Fees: $50 to close and/or transfer funds out of your account
  • Account Minimum: None
  • Stock and ETF Commissions: $4.95
  • Mutual Fund Commissions: $9.95
  • Learn more about TradeKing
Get started
Best IRA for Options Traders

  • Mutual Funds: $20 to buy/sell
  • Customer Service: Available 7am-7pm CT on weekdays only
  • Account Fees: $75 account closing fee
  • Account Minimum: None
  • Stock and ETF Commissions: $4.95
  • Mutual Fund Commissions: $20
  • Learn more about Optionshouse
Get started
Best IRA for No-Fee Mutual Funds

  • Commission: $8.95 per trade
  • Account minimum: $0
  • Current promotion: Get a $150 Amazon gift card by making a qualifying deposit of $1,000 or more into a new optionsXpress account and placing 10 or more trades within the first 90 days.
  • Read our full optionsXpress review
Get started
Best IRA for Index Funds

  • Mutual Funds & ETFs: 120 Vanguard mutual funds and 52 Vanguard ETFs
  • Customer Service: Available business hours daily
  • Account Fees: None (If account balance exceeds $10,000 OR you are signed up for electronic documentation)
  • Account Minimum: $3,000 ($1,000 for any Vanguard Target Retirement Funds or for Vanguard STAR Fund)
  • Stock Commissions: $20.00
  • Sign up for Vanguard
Get started


When is a Roth a Good Idea?

Roth IRA is different from a traditional IRA in that instead of getting a tax break upfront on the money put into the plan, you receive the tax break down the road – so the money you withdraw during retirement is withdrawn tax free.  If your tax rate goes up, a Roth would have been preferable, while if you tax rate goes down, a Traditional would have been the better choice.

Opening a Roth IRA thus makes a lot of sense for those who have the longest time to save and expect their tax rates to go up over time as a result of their career trajectory – young people beginning to save for retirement – because their money can grow tax-free for a long time.

How to Open a Roth IRA Step-By-Step

1. First, select the Roth IRA provider you would like. 

NerdWallet recommends either E*TRADE, TD Ameritrade, OptionsXpress by Schwab, or Scottrade among others.

2. Second, determine how much you can afford to contribute this year. 

The maximum contribution in 2013 is $5,500 if you are under 50 and $6,500 if you are over 50.

3. Third, Open and fund the account.

Once you’ve selected an account from the above options, get your bank account information ready or write a check so you can get your post-income-tax money sent to fund your new account.  Also have your additional personal information handy so you can sign up for the new account online in one sitting.

4. Fourth, Set Your Future Saving Goals

Come up with a goal for future years’ contributions so you can keep the savings building up over time.  Studies show that the psychology of making a financial commitment to yourself in advance is more likely to help you save more.  Planning ahead goes a long way!

5. Last, Don’t Forget To Contribute Next Year

Saving year after year is truly the best way to save enough for retirement.  Set yourself a calendar a year out so you don’t forget to contribute annually, as well as to monitor how your investments are doing over time.

Why you should open an IRA Account at all?  

Why open an IRA, whether it be a Roth or another kind?  It’s all about tax-advantaged savings and the magic of compounded returns over time.

NerdWallet recommends saving as much as you can as young as you can to get the most out of your tax-advantaged retirement options available to you now.


Written by Susan Lyon

  • Smart$

    Has anyone considered lending from 401k/IRA’s to boost returns? We have several lenders that have significantly enhanced their portfolios by adding small secure loans.

  • barbara

    I rolled my 401k over to an account with Edward Jones because I do not know much about stocks or plans. I am paying about 4% and am not sure what I am getting for that money. What options do I have?

  • Bolts88

    What about Fidelity?

  • Audrey

    I’m self-employed and was wondering if I’m eligible to open a Roth IRA. Since I’m responsible for paying my own taxes, wouldn’t any funds that I contribute be considered pre-tax money?

  • heather

    My rollover got confused and now my money is being held. I do not want it to go to the company it was suppose to go to. I wanted to just take it out, but they say they can only roll it over to another account. I plan on pulling it immediately anyway. Where would the best place to pull off this transaction be?

  • profitablesudden

    I have personally used ANDY LANK TOOLS System before. A friend of mine he is also an expert trader. He suggested me Andy Lank System.

  • sconesplease

    I have personally used ANDY LANK TOOLS System before. A friend of mine he is also an expert trader. He suggested me Andy Lank System.

  • enigmaticangelic

    ANDY LANK TOOLS always provide me right time signal to buy or sell. It’s a great program for newbie trader. Also there is good option for trading.

  • jc

    I am self employer, have 4 part time employees, what kind retirement do i need for taxe porpuses

  • Maxime Rieman

    Fidelity is a reasonable option as well.

  • Maxime Rieman

    You should be able to contribute to a Roth IRA as long as you don’t exceed the income limits:,-Employee/Amount-of-Roth-IRA-Contributions-That-You-Can-Make-for-2014

    Pre-tax contributions are made with income that you haven’t paid taxes on. If you pay taxes on your total income for the year, and don’t deduct the contributions to your Roth IRA, then those would be post-tax contributions.