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An individual retirement account, or IRA, is one of the best places to save for retirement — the tax benefits can give your savings a nice lift. And, spoiler alert: It typically takes just 15 minutes to open an account. We’re here to help you find the best IRA account for your situation.
How (and why) to open an IRA
Opening an IRA is a simple process. You’ll need to provide some personal information, including your birthdate and Social Security number, but that’s about it.
Even if you have a 401(k) or other workplace plan, it can make sense to save in an IRA — as long as you also make sure to get any company 401(k) match you may be offered — because IRAs often offer more investment choices. This is important, because your investment returns will have a big impact on your savings over time.
Say you put $500 every month into an IRA (that adds up to the annual maximum of $6,000). The stock market’s annual average return of 8% would get you more than $475,000 after 25 years. Even if you earned a more conservative 6%, you’d end up with more than $345,000 after 25 years.
Every year, we evaluate a broad swath of major U.S. online brokers and robo-advisors for the best IRA account offerings. Our favorites are below. (Note: The star ratings on this page are for the provider overall. Some brokers with a lower overall rating are included here because IRAs are where they excel.)
An individual retirement account, or IRA, is one of the best places to save for retirement — the tax benefits can give your savings a nice lift. And, spoiler alert: It typically takes just 15 minutes to open an account. We’re here to help you find the best IRA account for your situation.
How (and why) to open an IRA
Opening an IRA is a simple process. You’ll need to provide some personal information, including your birthdate and Social Security number, but that’s about it.
Even if you have a 401(k) or other workplace plan, it can make sense to save in an IRA — as long as you also make sure to get any company 401(k) match you may be offered — because IRAs often offer more investment choices. This is important, because your investment returns will have a big impact on your savings over time.
Say you put $500 every month into an IRA (that adds up to the annual maximum of $6,000). The stock market’s annual average return of 8% would get you more than $475,000 after 25 years. Even if you earned a more conservative 6%, you’d end up with more than $345,000 after 25 years.
Every year, we evaluate a broad swath of major U.S. online brokers and robo-advisors for the best IRA account offerings. Our favorites are below. (Note: The star ratings on this page are for the provider overall. Some brokers with a lower overall rating are included here because IRAs are where they excel.)
Summary of Best IRA Accounts of October 2021
| Broker | NerdWallet Rating | Fees | Account Minimum | Promotion | Learn More |
|---|---|---|---|---|---|
 SoFi Automated Investing Learn more on SoFi Invest's website | Best for Hands-Off Investors | 0% management fee | $0 | Free career counseling plus loan discounts with qualifying deposit | Learn more on SoFi Invest's website |
 Betterment Learn more on Betterment's website | Best for Hands-Off Investors | 0.25% management fee | $0 | Up to 1 year of free management with a qualifying deposit | Learn more on Betterment's website |
 Ellevest Learn more on Ellevest's website | Best for Hands-Off Investors | $1 - $9 per month | $0 | 2 months free with promo code "nerdwallet" | Learn more on Ellevest's website |
 E*TRADE IRA Learn more on E*TRADE's website | Best for Hands-On Investors | $0 | $0 | None no promotion available at this time | Learn more on E*TRADE's website |
 J.P. Morgan Self-Directed Investing Learn more on J.P. Morgan's website | Best for Hands-On Investors | $0 per trade | $0 | None no promotion available at this time | Learn more on J.P. Morgan's website |
Our picks for
Hands-Off Investors
on SoFi Invest's website
SoFi Automated Investing
Fees
management fee
Account Minimum
Promotion
career counseling plus loan discounts with qualifying deposit
on SoFi Invest's website
on Betterment's website
Betterment
Fees
management fee
Account Minimum
Promotion
of free management with a qualifying deposit
on Betterment's website
on Ellevest's website
Ellevest
Fees
per month
Account Minimum
Promotion
with promo code "nerdwallet"
on Ellevest's website
Our picks for
Hands-On Investors
on E*TRADE's website
E*TRADE IRA
Fees
Account Minimum
Promotion
no promotion available at this time
on E*TRADE's website
on J.P. Morgan's website
J.P. Morgan Self-Directed Investing
Fees
per trade
Account Minimum
Promotion
no promotion available at this time
on J.P. Morgan's website
Want to compare more options? Here are our other top picks:
Note: Some of these promotions won’t apply for first-time depositors, due to IRA contribution limits of $6,000 per year in 2021. We’ve included promotions with low deposit requirements where available.
Disclosure: The author held no positions in the aforementioned securities at the time of publication.
Last updated on September 21, 2021
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Methodology
NerdWallet’s comprehensive review process evaluates and ranks the largest U.S. brokers and robo-advisors by assets under management, along with emerging industry players, using a multifaceted and iterative approach. Our aim is to provide an independent assessment of providers to help arm you with information to make sound, informed judgements on which ones will best meet your needs.
DATA COLLECTION AND REVIEW PROCESS
We collect data directly from providers, and conduct first-hand testing and observation through provider demonstrations. Our process starts by sending detailed questionnaires to providers to complete. The questionnaires are structured to equally elicit both favorable and unfavorable responses from providers. They are not designed or prepared to produce any predetermined results. The questionnaire answers, combined with product demonstrations, interviews of personnel at the providers and our specialists’ hands-on research, fuel our proprietary assessment process that scores each provider’s performance across more than 20 factors. The final output produces star ratings from poor (one star) to excellent (five stars). Ratings are rounded to the nearest half-star.
RATING FACTORS
Evaluations vary by provider type, but in each case are based upon the weighted averages of factors that include but are not limited to: advisory and account fees, account minimums and types, investment selection, investment expense ratios, trading costs, access to human financial advisors, educational resources and tools, rebalancing and tax minimization options, and customer support including branch access, user-facing technology and mobile platforms.
Each factor can involve evaluating various sub-factors. For instance, when gauging the investment selections offered by robo-advisors, 80% of the score is based on the potential for diversification (how well-diversified a resulting portfolio of investments could be) combined with the availability of specialty portfolios and level of customization for investors. Expense ratios form an additional 10% of the score, and low or no management fee the remaining 10%.
FACTOR WEIGHTINGS
The weighting of each factor is based on our team’s assessment of which features are the most important to consumers and which ones impact the consumer experience in the most meaningful way. The factors considered, and how those factors are weighted, change depending upon the category of providers reviewed.
Provider categories include: Best Brokers for Stock Trading, Best Brokers for Beginners, Best Brokers for Day Trading, Best Brokers for Options Trading, Best Discount Brokers, Best Brokers for Free Trading, Best Investment Apps, Best Brokers for Penny Stocks, Best IRA Brokers, Best Robo-Advisors, Best Financial Advisors, Best Real Estate Platforms, Best Brokers for ETFs and Best Brokers for Mutual Funds.
INFORMATION UPDATES
Writers and editors conduct our broker and robo-advisor reviews on an annual basis but continually make updates throughout the year. We maintain frequent contact with providers and highlight any changes in offerings.
THE REVIEW TEAM
The review team comprises seasoned writers, researchers and editors who cover stocks, bonds, mutual funds, index funds, exchange-traded funds, alternative investments, socially responsible investing, financial advisors, retirement and investment strategy on a daily basis. In addition to NerdWallet, the work of our team members has been published in The New York Times, The Washington Post, Forbes, USA Today, Bloomberg News, Nasdaq, MSN, MarketWatch, Yahoo! Finance and other national and regional media outlets.
The combined expertise of our Investing team is infused into our review process to ensure thoughtful evaluations of provider products and services from the customer perspective. Our writers and editors combine to have more than 70 years of deep experience in finance, ranging from a former Wall Street Journal reporter to a former senior financial advisor at Merrill Lynch.
CONFLICTS OF INTEREST
While NerdWallet does have partnerships with many of the reviewed providers, we manage potential conflicts of interest by maintaining a wall between our content and business operations. This wall is designed to prevent our writers and the review process from being influenced or impacted by our business partnerships. This way, all reviews can provide an unbiased review that serves the interests of our users. For more information, see NerdWallet’s editorial guidelines.
To recap our selections...
NerdWallet's Best IRA Accounts of October 2021
- SoFi Automated Investing: Best for Hands-Off Investors
- Betterment: Best for Hands-Off Investors
- Ellevest: Best for Hands-Off Investors
- E*TRADE IRA: Best for Hands-On Investors
- J.P. Morgan Self-Directed Investing: Best for Hands-On Investors
- TD Ameritrade IRA: Best for Hands-On Investors
- Ally Invest Robo Portfolios
- Merrill Edge IRA: Best for Hands-On Investors
- Ally Invest IRA: Best for Hands-On Investors
- Fidelity Go: Best for Hands-Off Investors
- Schwab Intelligent Portfolios®: Best for Hands-Off Investors
- Fidelity IRA: Best for Hands-On Investors
- Vanguard: Best for Hands-On Investors
- Charles Schwab IRA: Best for Hands-On Investors
Frequently asked questions
Picking the best IRA account will depend a bit on what matters most to you. Below we detail some criteria to keep in mind, but don’t forget that the most important thing is to get started saving for retirement. The sooner you get started, the better off you’ll be. Before decision paralysis slows you down, consider simply opening an account at one of our top picks — we’ve done hours of research already.
Here are some important criteria to keep in mind as you pick the best IRA account:
Low-cost investments: For long-term retirement-savings success, make sure high fees don’t eat into your investment returns. Open your IRA at a broker or robo-advisor that offers low-cost investments (if you’re thinking of opening your IRA at a bank, check out the FAQ below for more on bank IRAs). For many retirement investors, a smart investment is a low-cost mutual fund. Investing in a handful of mutual funds is an easy way to own a diversified portfolio, because each mutual fund invests in dozens, hundreds or even thousands of companies. With mutual funds, one of the main fees to focus on is the expense ratio. Ideally, you’re investing in mutual funds with an expense ratio of less than about 0.5%.
Low fees: While you’re keeping an eye on expense ratios, also keep others fees in mind. If you’re a do-it-yourself investor who plans to open an IRA at a broker, make sure you pick a broker with low trading commissions (or a high number of commission-free ETFs and no-transaction-fee mutual funds) and low transfer and other fees.
Investment help: If you want guidance picking investments, a robo-advisor likely is a better choice for you than a broker. All robo-advisors offer either ready-to-go investment portfolios or provide some help picking investments.
Customer support: Make sure the broker or robo-advisor offers customer support that meets your needs, whether that’s live chat, telephone support or access to human financial planners.
You might have noticed we don’t include any bank IRA accounts in our roundup of the best IRAs. Generally, an investment broker or robo-advisor is a better option than a bank for an IRA account, because for a long-term goal like retirement you want to tap into the power of the stock market to grow your money.
Bank IRAs generally offer access to savings products such as certificates of deposit. CDs are savings products that guarantee a rate of return as long as you leave your money in for a specific period of time. Historically, stock market returns average about 10% a year. CDs are currently offering about 3%. Yes, the stock market comes with the risk that, in any given year, your account may lose value — but investors who leave their money in the market, even through those down days, generally enjoy hefty gains over time.
If, despite that, you decide to go with a bank CD, be sure to pick among the IRA accounts with the best IRA CD rates so you know you’re getting the best possible rate of return for that type of account.
While unlikely, it is possible for an IRA account to lose value and, potentially, drop to zero. That’s much likelier to happen if you invest in a single company stock. The key to sidestepping this risk is to make sure your investments are diversified. That means investing in a variety of companies — of different sizes and in different industries and locations — and in both stocks and bonds. That way, when any one slice of your investments faces trouble, the others are there to keep your overall portfolio on a steady course.
The easiest path to a diversified portfolio is with mutual funds and exchange-traded funds. One single fund can invest in thousands of companies, making it a simple one-stop shop for investment diversification.
Anyone can open a traditional IRA — there are no income limits — but if you’re also covered by a workplace retirement plan like a 401(k), the amount of your contribution that you can deduct on your tax return may be phased down or eliminated based on your income.
If you exceed the income limits, you can still make the maximum annual contribution, but a portion or all of it will be considered a nondeductible contribution. There’s no immediate tax benefit on nondeductible contributions, but you’re still able to defer taxes on investment income until retirement. Read more about the traditional IRA deduction limits.
Roth IRAs have income limits for eligibility; if you earn too much, your contribution limit is phased down or eliminated completely. To see if you’re affected, use our Roth IRA calculator.
IRA accounts offer significant tax benefits over traditional savings and brokerage accounts. As long as your money stays in an IRA, you’ll owe no tax on your investment earnings — that means you have a bigger nest egg to compound and grow each year. In contrast, with a traditional brokerage account, taxes may eat into your savings every year, depending on how you invest.
And if you qualify for a deductible IRA, the benefits are even greater, because you’ll reduce your taxable income for the year you contribute. For example, if your marginal tax rate is 25%, a $6,000 IRA contribution can reduce your tax bill by $1,500. See if you’re eligible for a deductible IRA here.
There are a few differences between these accounts, but the main way they differ has to do with taxes:
A traditional IRA earns you a tax deduction on contributions for the year they are made. You’ll then pay income taxes on the distributions you take in retirement. Because you’re delaying taxes until retirement, the investment growth in a traditional IRA is tax-deferred.
A Roth IRA offers no tax deduction when you make contributions, but qualified distributions in retirement are not taxed. That makes the investment income in a Roth IRA tax-free — you won’t pay taxes on it at all, so long as you wait until retirement to access it.
Generally, a traditional IRA is best if you expect your tax rate to be lower in retirement than it is now — by putting off taxes until retirement, you’ll pay that lower rate. If you expect the opposite to be true — your taxes are lower now and will be higher in retirement — you may want to choose a Roth IRA.
For more on this decision, dig into our comprehensive comparison of Roth and traditional IRAs.
You can contribute up to $6,000 to an IRA each year, or $7,000 if you’re 50 or older. (Those are the annual contribution limits in 2020 and 2021.) That’s a combined limit shared by the two types of IRA — you can have both a Roth and a traditional IRA, but that maximum limit applies to all of your IRA contributions combined. But the contribution limit doesn’t include amounts rolled over, such as from a 401(k).
This is a retirement account, so the money is intended to stay put until age 59½ or later.
That said, traditional IRA withdrawal rules are stricter than Roth IRA withdrawal rules: With a traditional IRA, you may be taxed and hit with a 10% early withdrawal penalty if you pull money out before age 59½. There are a few exceptions. With a Roth IRA, you can pull your contributions out at any time — remember, you’ve already paid taxes on them. You may be taxed or penalized on early distributions of investment earnings, however.
It’s a simple process: You can open an IRA online, at any broker or robo-advisor (though we’re partial to the ones above, for the reasons we outlined). It takes about 15 minutes and you’ll need to provide some personal information, including your name, birthdate, mailing address and Social Security number. Here’s our guide to opening an IRA, which also includes information about how to fund and invest the account.
Unlike savings accounts, IRAs don’t pay a set interest rate or return. Once you’ve put money into the account, you need to select investments; otherwise, your money will sit in cash, which isn’t ideal for a long-term goal like retirement. Most IRA providers offer a wide range of investment options, including individual stocks, bonds and mutual funds. If that sounds out of your league, you can open your IRA at a robo-advisor which will manage your investments for you for a small fee.
