Best IRA Accounts of May 2019

Note: Some of these promotions won’t apply for first-time depositors, due to IRA contribution limits of $6,000 per year in 2019. We’ve included promotions with low deposit requirements where available.

Our rating methodology

NerdWallet’s ratings for brokers and robo-advisors are weighted averages of several categories, including investment selection, customer support, account fees, account minimum, trading costs and more. Our survey of brokers and robo-advisors includes the largest U.S. providers by assets under management, plus notable and/or emerging players in the industry. Factors we consider, depending on the category, include advisory fees, branch access, user-facing technology, customer service and mobile features. The stars represent ratings from poor (one star) to excellent (five stars). Ratings are rounded to the nearest half-star.

IRA FAQs

Am I eligible to save on taxes with an IRA?

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.

What are the benefits of an IRA?

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.

What is the difference between a traditional IRA and a Roth IRA?

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.

What is the IRA contribution limit?

You can contribute up to $6,000 to an IRA each year, or $7,000 if you’re 50 or older. (Those are the contribution limits in 2019.) 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).

How easily can I access that money?

This is a retirement account, so the money is intended to stay put until age 59 ½ 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 59 ½. 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.

How do I open an IRA?

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.[/nw_accordion]

What do you mean by 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 — like the two mentioned above — which will manage your investments for you for a small fee.