BEST OF
14 Best Roth IRA Accounts of August 2021
A Roth IRA is a great tool to help you save for retirement. Check out our picks for the top Roth IRA account providers below.
A Roth individual retirement account, or IRA, is one of the best places to save for retirement — you put money in after paying income taxes on it, but then your account grows entirely tax-free. In retirement, you don’t have to pay any tax on withdrawals, provided you follow the rules, which can mean more financial freedom for you. And it’s easy to get going: It takes just 15 minutes to open an account.
But what's the best Roth IRA investment for you? We’re here to help you decide. Every year, we evaluate major U.S. online brokers and robo-advisors to select the best Roth IRA account. Our current picks are below. (Note: The star ratings on this page are for the provider overall. Some providers with a lower overall rating are included here because IRAs are where they excel.)
A Roth individual retirement account, or IRA, is one of the best places to save for retirement — you put money in after paying income taxes on it, but then your account grows entirely tax-free. In retirement, you don’t have to pay any tax on withdrawals, provided you follow the rules, which can mean more financial freedom for you. And it’s easy to get going: It takes just 15 minutes to open an account.
But what's the best Roth IRA investment for you? We’re here to help you decide. Every year, we evaluate major U.S. online brokers and robo-advisors to select the best Roth IRA account. Our current picks are below. (Note: The star ratings on this page are for the provider overall. Some providers with a lower overall rating are included here because IRAs are where they excel.)
Summary of Best Roth IRA Accounts of August 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 Learn more on E*TRADE's website | Best for Hands-On Investors | $0 per trade | $0 | Get $600 or more when you open and fund an E*TRADE account with code: BONUS21 | 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
Fees
per trade
Account Minimum
Promotion
when you open and fund an E*TRADE account with code: BONUS21
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:
Disclosure: The author held no positions in the aforementioned securities at the time of publication.
Last updated on August 4, 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 Roth IRA Accounts of August 2021
- SoFi Automated Investing: Best for Hands-Off Investors
- Betterment: Best for Hands-Off Investors
- Ellevest: Best for Hands-Off Investors
- E*TRADE: Best for Hands-On Investors
- J.P. Morgan Self-Directed Investing: Best for Hands-On Investors
- Ally Invest Managed Portfolios: Best for Hands-Off Investors
- TD Ameritrade IRA: Best for Hands-On Investors
- Ally Invest IRA: Best for Hands-On Investors
- Vanguard: Best for Hands-On Investors
- Schwab Intelligent Portfolios®: Best for Hands-Off Investors
- Fidelity Go: Best for Hands-Off Investors
- Charles Schwab IRA: Best for Hands-On Investors
- Merrill Edge IRA: Best for Hands-On Investors
- Fidelity IRA: Best for Hands-On Investors
Frequently asked questions
Our roundup of the best Roth IRAs focuses on accounts offered by brokers and robo-advisors — not banks. Generally, a broker or robo-advisor is a better option than a bank for a Roth IRA account. That’s because, for a long-term goal like retirement, you want to harness the power of the stock market to help your account get bigger.
Bank Roth IRAs generally offer access to savings products, such as certificates of deposit. CDs are savings vehicles 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%.
Of course, those higher stock market returns come 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, enjoy hefty average gains over time.
If, despite the much lower rate of return, you decide to go with a bank for your Roth IRA account, be sure to pick among the accounts with the best IRA CD rates so you know you’re getting the best possible rate of return for that type of account.
The short answer? Yes, it’s almost always a good idea to invest in a Roth IRA account.
Roth IRAs offer a sweet tax benefit for retirement savers. Plus, you can withdraw your contributions at any time, without penalty, which means a Roth can act as a backup emergency fund.
Keep in mind that Roth IRAs don’t offer an immediate tax break. Your investment earnings grow tax-free in the Roth IRA account, and you never pay taxes on those earnings, assuming you follow the withdrawal rules.
Now, if your tax rate is the same when you contribute to the account as it is later, when you withdraw the money, then a Roth IRA and a traditional IRA offer essentially the same benefit. The only difference is the timing of your tax bill — with a traditional IRA you pay your tax bill later and with a Roth you pay your tax bill upfront.
But many people find that their tax rate changes over time. If your tax rate is likely to be higher in the future — that’s often the case for young adults who are just starting out in their careers — then a Roth makes sense, because you pay the income tax on your contributions now, when your tax rate is lower.
Of course, it can be really hard to know what your future tax rate will be, especially if retirement is decades away, so it can make sense to contribute both to a 401(k) or traditional IRA, and to a Roth IRA, if you qualify.
No matter what, if you have a 401(k) or other workplace retirement plan, contribute enough to get the match — that’s free money you don’t want to pass up.
How much you earn in a Roth IRA account will vary, depending on what you’re investing in. The average annual stock market return historically has been about 10%.
Of course, you want to invest in a diversified portfolio of both stocks and bonds, so that your account has a buffer from the stock market’s inevitable ups and downs. Generally, creating a diversified investment portfolio means investing in a handful of mutual funds or exchange-traded funds, which, in turn, invest in a broad swath of stocks and bonds.
A diversified investment portfolio will inevitably earn less than the stock market’s return, because bond yields tend to be in the single digits. Still, a diversified portfolio of stocks and bonds generally earns more than any bank savings product, such as a savings account or CD.
The Roth IRA has income rules for contributions. For 2020, the amount you can contribute begins to phase down when your annual income hits $124,000 for single filers and $196,000 for those married filing jointly. For 2021, that income limit is $125,000 for single filers and $198,000 for married-filing-jointly filers. The contribution limit is slowly reduced until your ability to contribute is eliminated completely. If your income is above these amounts, our Roth IRA calculator will tell you how much you can contribute.
With a traditional IRA and a Roth IRA, the contribution limit is a shared limit — you can contribute a total of up to $6,000 per year ($7,000 if age 50 or older), and it’s up to you to decide how you want to divvy that up between the two.
With a Roth IRA, you can pull your contributions out at any time — remember, you’ve already paid taxes on that money.
However, if you withdraw your investment earnings, you may owe income tax and/or a 10% penalty, depending on how old you are and how long you’ve owned the account. But there are quite a few situations where an early withdrawal of investment earnings is exempt from penalties and income tax. We detail those exceptions here.
Yes. You can have both a Roth IRA and a 401(k) and contribute the maximum you’re allowed to each.
Traditional IRAs don’t have 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 may be phased down or eliminated.
That means 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.
The process is easy as can be: You can open a Roth IRA at any online broker or robo-advisor, typically online in about 15 minutes. You’ll need to provide some personal information like your name, address, birthday, Social Security number and means of funding the account, so have that handy. Here’s our step-by-step guide to opening a Roth IRA, including details about how to fund and invest the account.
Unlike savings accounts, Roth 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 Roth 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 Roth IRA at a robo-advisor — like the providers mentioned above in the Hands-Off Investors category — which will manage your investments for you for a small fee.
