NerdWallet, Inc. is an independent publisher and comparison service, not an investment advisor. Its articles, interactive tools and other content are provided to you for free, as self-help tools and for informational purposes only. They are not intended to provide investment advice. NerdWallet does not and cannot guarantee the accuracy or applicability of any information in regard to your individual circumstances. Examples are hypothetical, and we encourage you to seek personalized advice from qualified professionals regarding specific investment issues. Our estimates are based on past market performance, and past performance is not a guarantee of future performance.
We believe everyone should be able to make financial decisions with confidence. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free.
So how do we make money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. Here is a list of our partners.
How to Open a Roth IRA: A 6-Step Guide for Beginners
6 easy steps to open a Roth IRA and potentially supercharge your retirement savings.
Arielle O’Shea leads the investing and taxes team at NerdWallet. She has covered personal finance and investing for over 15 years, and was a senior writer and spokesperson at NerdWallet before becoming an assigning editor. Previously, she was a researcher and reporter for leading personal finance journalist and author Jean Chatzky, a role that included developing financial education programs, interviewing subject matter experts and helping to produce television and radio segments. Arielle has appeared on the "Today" show, NBC News and ABC's "World News Tonight," and has been quoted in national publications including The New York Times, MarketWatch and Bloomberg News. She is based in Charlottesville, Virginia.
June Sham Lead Writer | Personal finance, retirement
June Sham is a lead writer on NerdWallet’s investing and taxes team covering retirement and personal finance. She is a licensed insurance producer, and previously was an insurance writer for Bankrate specializing in home, auto and life insurance. She earned her Bachelor of Arts in creative writing at the University of California, Riverside.
Chris Hutchison helped build NerdWallet's content operation and has worked across banking, investing and taxes. He now leads a team exploring new markets. Before joining NerdWallet, he was an editor and programmer at ESPN and a copy editor at the San Jose Mercury News.
Raquel Tennant Financial Guide | financial planning, wealth management, high net worth, underserved communities, retirement planning
Raquel Tennant, CFP®, is a financial guide at Fruitful, a financial wellness platform providing members with unlimited financial advice and access to financial planning to the masses at a low cost. Tennant began her career in the fee-only RIA firm space, serving ultra high-net worth clients and is now proud to align her passion for helping younger, diverse and underserved clients, who often feel neglected by traditional firms. A graduate of Towson University, Tennant is one of the first 12 inaugural graduates of Towson's CFP Board Registered Financial Planning major and the first of her class to pass the CFP exam. She proudly collaborates with her alma mater as a writer and guest speaker to students, faculty and staff, bringing awareness to both the financial planning major and the RIA financial planning industry. She has been featured on 2050 TrailBlazer’s podcast episode “The Power of Partnership”, CFP Board’s "Stay on Your Path" video, and Towson’s College of Business & Economics “Finding the Right Fit” news feature. Tennant is also a CFP Board professional mentor.
At NerdWallet, our content goes through a rigorous editorial review process. We have such confidence in our accurate and useful content that we let outside experts inspect our work.
Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.
The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.
You’re following Arielle O'Shea and June Sham Visit your My NerdWallet Settings page to see all the writers you're following.
A Roth IRA is a true gift for retirement savers. While you might not get the tax benefit now, contributions and earnings in the account grow tax-free. In addition to tax-free withdrawals, Roth IRAs also don't have required minimum distributions, so you can choose to leave the money in the account to keep growing after you've retired.
For 2024, the contribution limit is $7,000 if your modified adjusted income is below $146,000 (single filers) or $230,000 (married filing jointly).
At incomes above that, your contribution limit begins to phase out, until it is eliminated completely at $161,000 for single filers and $240,000 for those married filing jointly.
If your income exceeds those limits, the backdoor Roth IRA strategy lets you open a Roth by converting money from a traditional IRA.
NerdWallet's ratings are determined by our editorial team. The scoring formula for online brokers and robo-advisors takes into account over 15 factors, including account fees and minimums, investment choices, customer support and mobile app capabilities.
NerdWallet's ratings are determined by our editorial team. The scoring formula for online brokers and robo-advisors takes into account over 15 factors, including account fees and minimums, investment choices, customer support and mobile app capabilities.
NerdWallet's ratings are determined by our editorial team. The scoring formula for online brokers and robo-advisors takes into account over 15 factors, including account fees and minimums, investment choices, customer support and mobile app capabilities.
If you're a “do-it-yourself” investor, choose a brokerage.
You can open a Roth IRA at an online broker and then choose your own investments. This may be simpler than you think — you can build a diversified portfolio with just three or four mutual funds that are in different asset classes. When comparing brokers, look at trade commissions and the investment fees of their offered funds (also called expense ratios).
If you're a “manage it for me” or hands-off investor, choose a robo-advisor.
If you’d rather have someone pick an investment portfolio for you, you can open your Roth IRA at a robo-advisor. Robo-advisors are online services that build and maintain a diversified portfolio for you. You pay a small fee for the service, but their fees generally are far lower than a human financial advisor.
How much do you need to open a Roth IRA? While there generally isn’t a fee for opening a Roth IRA, there may be other costs and requirements depending on your provider and selected investments. Some brokers and robo-advisors — but not all — may require a minimum amount to open an account with them, or charge trading commissions when investments are bought and sold.
Think about your budget, your time horizon, and investing goals, and consider investing only money you won’t need in the next five years. That way, you have time to ride out the highs and lows of the market.
You’ll also need money to buy investments in your Roth IRA. Some mutual funds may have a $1,000 or higher minimum investment, although future investments can be smaller. Mutual funds and ETFs also may charge expense ratios, and other fees as well. We‘ll talk more about how to invest your Roth IRA in step 6.
4. Select a provider to open your Roth IRA
The next step in how to open a Roth IRA is to find a home for your account.
Opening a Roth IRA as a 'do-it-yourself' investor
For people who want to pick their own investments, opening a Roth IRA at an online broker makes a lot of sense. At the best brokers, you’ll find a large list of low-cost investments to choose from, including index mutual funds and exchange-traded funds. The top brokers also offer extensive retirement planning tools, robust customer service and reasonable account minimums and fees. And you maintain complete control over how your retirement funds are invested.
Opening a Roth IRA as a 'hands-off' investor
For people who want to invest for retirement but don’t want to worry about managing their portfolio over time, a robo-advisor is an easy choice. Generally, robo-advisors hire investment pros to develop a handful of portfolios aimed at different types of investors. Some robos offer portfolios that vary based on amount of risk, with “aggressive” ones for people who want a high percentage of their portfolio in stocks and “conservative” for people who seek a less volatile investment account.
As an investor, all you have to do is open your Roth IRA, link your bank account and follow the steps the provider uses to build your portfolio. The robo-advisor then purchases the investments for you and manages the account over time. Many robos also offer services that can help maximize your savings, such as goal-setting tools to get your finances on track, and strategies to reduce your tax bill. (Robo-advisors generally are registered investment advisors, operating under a similar structure to human investment advisors.)
So, you’ve learned all about how Roth IRAs work and even settled on a provider. Now what? It’s time to gather any paperwork or documentation you may need to set up your Roth IRA account.
Exact requirements may vary based on the financial institution, but generally, you may want to have the following information available during the sign-up process:
Access to a working email and phone.
An ID (such as a state driver’s license or a passport) to confirm your identity, address, and date of birth.
A Social Security number or tax identification number.
Proof of employment, if applicable.
The name, addresses and dates of birth of any beneficiaries you’d like to add to the account.
The name and addresses of any trusted contacts in case your account’s security is breached.
The routing and/or account numbers for the bank account you’ll use to fund your Roth IRA.
A smart view of your financial health
Track your retirement savings balances in one place by linking your accounts.
The last step in learning how to open a Roth IRA is to decide how to invest the money in the account.
A Roth IRA is an account type, not an automatic investment. Contributing is just the first step. If you want to build wealth over time, you need to invest that money.
If you're a hands-off investor and you've opted to open your Roth IRA at a robo-advisor, that service will choose a diversified investment portfolio for you.
If you're a DIY type of investor, you can get that diversification on your own by building a portfolio out of index mutual funds and ETFs. To do that, you’ll want to decide how much of your money to put toward riskier investments, such as stock funds, and how much you want to keep relatively safe in, for example, bond funds and cash. This mix is called your asset allocation.
IRAs give you access to a large pool of investment options. Once you’ve decided on your allocation, you can select specific funds to meet that.
And if you get stuck? Use a model. Check out the portfolios used by robo-advisors (often displayed on their websites), then mimic them. Be sure to rebalance the investments as they shift out of the original allocation you decided on because you won’t have robo-advisors to do it for you.
If you have a 401(k) that offers matching dollars and you’re not contributing enough to earn them all, that's where you could direct your retirement savings first.
There are two main types of IRA: Roth and traditional. Traditional IRAs can come with an upfront tax break, but the Roth is often a good choice for those who qualify. Early withdrawal rules are much more flexible with a Roth, and there are fewer restrictions for retirees. Plus, unless you're an extremely disciplined saver, you'll end up with more after-tax money in a Roth IRA. Here's more on a Roth vs. traditional IRA.
Once you figure out how much you can contribute, consider setting up automatic transfers. Not only do you avoid the hassle of initiating the transfer each month, but you ensure you’re saving regularly. (Also, some brokers waive their initial deposit requirement if you agree to automatic transfers each month.)
Watch your contribution amount. Contributing more than the annual limit — $7,000 in 2024 ($8,000 if age 50 or older) — may leave you subject to an IRS penalty. Keep in mind that the contribution limit is for all your IRA accounts combined — if you have a Roth and a traditional, that limit is a total across both accounts.
Frequently asked questions
Where is the best place to open a Roth IRA?
Many online brokerages and robo-advisors offer competitive Roth IRAs. Look for a provider that aligns with your needs and budget.
A robo-advisor, described above, can be a good option. We also have a complete guide to how to invest within your IRA that provides an overview of ideas
Can I transfer an old 401(k) to a Roth IRA?
Yes. Moving your money from a 401(k) at a former employer to a Roth IRA is a reasonably straightforward two-step process, and most 401(k) and IRA providers are well-equipped to handle it. You would roll your 401(k) money to a traditional IRA, and then convert to a Roth. Keep in mind that when moving regular 401(k) or IRA money to a Roth, the deferred income taxes are due at that point. You can learn how it all works in our 401(k) rollover guide.
How much should I save for retirement anyway?
There are lots of factors to consider here, including your income, desired retirement age, monthly expenses, health status and future Social Security benefit levels. Our retirement calculator can help you gauge whether you're saving enough to ensure a comfortable retirement.
Where is the best place to open a Roth IRA?
Many online brokerages and robo-advisors offer competitive Roth IRAs. Look for a provider that aligns with your needs and budget.
Yes. Moving your money from a 401(k) at a former employer to a Roth IRA is a reasonably straightforward two-step process, and most 401(k) and IRA providers are well-equipped to handle it. You would roll your 401(k) money to a traditional IRA, and then convert to a Roth. Keep in mind that when moving regular 401(k) or IRA money to a Roth, the deferred income taxes are due at that point. You can learn how it all works in our
There are lots of factors to consider here, including your income, desired retirement age, monthly expenses, health status and future Social Security benefit levels. Our
NerdWallet's ratings are determined by our editorial team. The scoring formula for online brokers and robo-advisors takes into account over 15 factors, including account fees and minimums, investment choices, customer support and mobile app capabilities.