How to Open an IRA in 4 Steps

Nerdy takeaways

You can open an IRA at an online broker or an online advisor, called a robo-advisor.
There is no age limit for opening or contributing to an IRA, as long as you have a source of earned income.
An IRA isn't an investment; it's an investment account. Once open, you'll need to fund the IRA and choose investments.

Individual retirement accounts are important tools that help you save and invest for retirement. Unlike 401(k)s, which are largely accessed through workplace programs, an IRA is open to virtually anyone. Opening one is easy, and once you've done that, you can take your time funding the account and making investment selections.

1. Decide whether you want to manage your own IRA

What sort of investor are you — hands-on or hands-off? Your answer will help determine whether you should set up an IRA with an online broker or a robo-advisor.

» Want a shortlist? View our picks for the best IRA accounts

Opening an IRA at an online broker

If you want to choose and manage your investments, you’ll need an online broker. Here you’ll open an account, fund it with your IRA contribution and then select investments — typically mutual funds, stocks or bonds.

Look for a broker that has low or no account fees, offers a wide selection of no-transaction-fee mutual funds and commission-free exchange-traded funds, and provides solid customer support and educational resources, especially if you’re a new investor.

Charles Schwab	Interactive Brokers IBKR Lite	J.P. Morgan Self-Directed Investing
NerdWallet rating 4.8 /5	NerdWallet rating 5.0 /5	NerdWallet rating 4.5 /5
Fees $0 per online equity trade	Fees $0 per trade	Fees $0 per trade
Account minimum $0	Account minimum $0	Account minimum $0
Promotion None no promotion available at this time	Promotion None no promotion available at this time	Promotion Get up to $700 when you open and fund a J.P. Morgan Self-Directed Investing account with qualifying new money.
Learn More	Learn More	Learn More

Opening an IRA at a robo-advisor

If you’d like an automated way to manage your investments, consider a robo-advisor. A robo-advisor will choose low-cost funds for you based on your retirement timeline and risk tolerance, for a fraction of the cost of hiring a human financial advisor. Robo-advisors are great for those want a professional to handle the investment decisions. Look for one with a low management fee and services that meet your needs. Automatic rebalancing and portfolio management are usually standard, but other features can vary by provider.

🤓Nerdy Tip

You may wonder why a bank isn't mentioned here — banks do sometimes offer IRA accounts, but they don't offer access to stock market investments, which is what most retirement investors will want. Through a bank, you'll likely be limited to fixed-income options like CDs, which may not outpace inflation over time.

2. Open your account

The actual steps involved in opening an IRA will vary slightly by provider, but the process itself is pretty straightforward. In general, you’ll head to the provider’s website or mobile app, choose the type of IRA you want to open (Roth or traditional) and fill in some personal details such as your Social Security number, date of birth, contact information and employment information.

3. Fund your IRA

Once you've opened the account, you'll see your options for funding it.

Just remember that IRAs have annual contribution limits of $7,000 in 2024 and 2025 ($8,000 if age 50 and older). You don't have to contribute that much, but you can't contribute more than that limit. These limits cover multiple accounts, so if you have both a Roth IRA and a traditional IRA, you’ll need to keep your total contributions at or below the maximum.

When it comes to retirement, starting with any amount early on is better than nothing — and you don't have to fund it all at once. A common strategy, known as dollar-cost averaging, is to make regular contributions at set intervals. For example, perhaps you stash away $100 per month in your IRA.

Some employers also allow you to make IRA contributions from your paycheck by splitting your direct deposit destinations.

Contributing to an IRA from a savings or checking account

If you want to contribute to your new IRA account from a bank account, you’ll need your account number and routing number. If you’re just starting out, it may be helpful to set up automatic transfers.

Contributing from another investment account

You can also transfer assets from an existing IRA — say you want to change account providers — into your new IRA, or you can contribute from a taxable brokerage account.

If you have a 401(k) from an old job, you can move those funds into an IRA by doing a 401(k) rollover. For many people, rolling over into an IRA is a convenient option — IRAs tend to have a wider array of investment choices.

The IRA provider will help you do this — many have “rollover specialists” on staff — but the basics are simple: You’ll contact your former employer’s plan administrator and complete a few forms, and they will send your account balance (via check or by wiring the funds) to your new provider.

» Ready to get started? See the best IRA providers for a 401(k) rollover.

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4. Choose your IRA investments

If you decide to use a robo-advisor for your IRA, you don’t actually need to choose your investments. Your robo-advisor will ask you for your goals and preferences and select investments that match up with them, and even adjust those investments over time.

If you’re going the hands-on route with an online broker, consider building a portfolio out of low-cost index funds and ETFs. This approach makes it easier to ensure adequate diversification in your portfolio (which lowers your investing risks) and helps minimize the fees you’ll pay.

You can explore this topic in more detail in our article on investing your IRA.

Frequently asked questions about opening an IRA

Where is the best place to open an IRA?

Many brokerages offer competitive IRAs. NerdWallet’s analysis of the best IRA accounts can help narrow your search and focus on the features that matter most to you.

Can I open an IRA at a bank?

Yes, many banks offer IRA accounts. But with a bank IRA, generally your money will go into a type of savings vehicle, such as a certificate of deposit, that offers a much lower rate of return than, say, a stock and bond portfolio might enjoy. For a long-term goal like retirement — where you have the time to let your account ride out any market declines — it makes sense to invest for growth.

What is the minimum to open an IRA?

The IRS doesn't require a minimum amount to open an IRA. However, some providers do require account minimums, so if you've only got a small amount to invest, find a provider with a low or $0 minimum. Also, some mutual funds have minimums, so you need to account for that as you choose your investments. But many investments have no or a low account minimum. Focus on those if you're on a tight budget.

How much does it cost to open an IRA?

There isn't typically an opening fee, though there are a few potential up-front costs. Some brokers and robo-advisors require a minimum amount to open an account, so you'll either have to come up with that dollar figure or choose a different provider. You'll also need enough money to purchase investments you want in your IRA. Some brokers also charge trading commissions when you buy or sell investments. If you invest in mutual funds or ETFs, you'll pay an expense ratio and possibly other fees as well.

What if I'm not sure how to invest my IRA?

We've got a page dedicated to how to invest within your IRA. The good news is you don't need to be an investing expert to pick appropriate investments for your IRA. But if you're still anxious about it, you can even consider opening your IRA with a robo-advisor, which will pick your investments for you based on your goals and risk tolerance.

Can I transfer an old 401(k) to an IRA?

Yes. Moving your funds from a 401(k) at a former employer to an IRA is a straightforward process, and most 401(k) and IRA providers are well-equipped to handle it. You can learn how it all works in our 401(k) rollover guide.

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