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Best Roth IRA Accounts: 2018 Top Picks

Jan. 5, 2018
Brokers, Investing, IRA
NerdWallet adheres to strict standards of editorial integrity to help you make decisions with confidence. Some of the products we feature are from partners. Here’s how we make money.
We adhere to strict standards of editorial integrity. Some of the products we feature are from our partners. Here’s how we make money.

The best IRA providers offer low-cost investments, robust customer service, extensive retirement planning tools and reasonable account minimums and fees. We’ve spent over 200 hours researching providers to help you find the one that’s best for you.

Ready to compare accounts? Jump below to see our top IRA picks.

A Roth individual retirement account (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 Future You. And it’s easy to get going: It takes just 15 minutes to open an account.

We’re here to help. Every year, we evaluate major U.S. online brokers and robo-advisors to select the best Roth IRA providers. Our favorites are below.

How (and why) to open a Roth IRA

Opening a Roth IRA is easy: You’ll need to provide some personal information, including your birthdate and Social Security number, but that’s about it.

Keep in mind that with a Roth, you can withdraw your contributions at any time without paying taxes or penalties. In that way, Roths can act as a backup emergency savings account. Plus, once you’re retired, there are no required minimum distributions (as there are with traditional IRAs). Just remember that there are income-based eligibility requirements for funding a Roth IRA — see the FAQs below.

Even if you have a 401(k) or other workplace plan, it can make sense to save in a Roth IRA — as long as you also make sure to get any company 401(k) match you may be offered — because Roths 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 $455 every month into a Roth IRA (that’s about the annual maximum of $5,500). The stock market’s annual average return of 8% would get you almost $400,000 after 25 years. Even if you earn a more conservative 6%, you’d end up with more than $300,000 after 25 years.

Need more help with this process? See our guide on Roth IRAs.

Choose your investment style

Pick the investor type that describes you so we can point you toward the best provider for your situation:

  • I’m a “do-it-yourself” investor. 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). With the providers detailed below, you generally won’t pay an account fee (though that may require your agreeing to electronic document delivery or maintaining a minimum account balance), so the primary costs you need to watch for are trading commissions and investment fees (which are also called expense ratios).
  • I’m a “manage it for me” investor. 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 investment services that build and maintain a diversified portfolio for you. You pay a small fee for the service, but their fees generally are substantially lower than a human financial advisor — typically 0.25% to 0.50% of the assets under management annually. These services are growing rapidly today: Our top two robo-advisor picks, Wealthfront and Betterment, both have over $10 billion in assets under management.

Best Roth IRA brokers for “do-it-yourself” investors

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. Here are three of the favorites from our 2018 analysis:
NerdWallet rating

Fees

$4.95

per trade

Account minimum

$0

Promotion

Up to $3,500

in cash bonus with a qualifying deposit

The bottom line

Ally Invest’s low commissions, no annual fee and no account minimum make it a good choice for IRA investors. For investors who want to be more active, the broker also offers a solid suite of research and tools, but IRA customers may be put off by closure and transfer-out fees.

Show pros & cons

Pros

  • Low commissions

  • No account minimum

  • No IRA annual fee

  • Strong web-based platform

  • Robust research and tools

Reader favorite

Cons

  • IRA closure fee of $25

  • IRA transfer out fee of $50

Read full review
NerdWallet rating

Fees

$6.95

per trade

Account minimum

$0

Promotion

$100-$600

in cash bonus with a qualifying deposit

The bottom line

Merrill Edge offers high-quality customer service, robust research, low commissions and fees -- all with no account minimum for IRA investors. Customers of parent company Bank of America will love the seamless, thoughtful integration, with a single login to access both accounts.

Show pros & cons

Pros

  • No account minimum to access first-rate customer service.

  • Robust third-party research.

  • Ongoing promotions for opening and funding a qualified IRA account.

Reader favorite

Cons

  • No commission-free ETFs for IRA investors.

  • Minimum balance requirement for day trading platform.

Read full review
NerdWallet rating

Fees

$6.95

per trade

Account minimum

$0

Promotion

$100-$600

in cash bonus with a qualifying deposit

The bottom line

TD Ameritrade’s $0 account minimum, wealth of free research and retirement planning tools, and plentiful lineup of no-transaction-fee mutual funds and commission-free ETFs make it an ideal place to set up an IRA. Its library of educational resources and free paper trading account are also great features to help investors hone their skills.

Show pros & cons

Pros

  • $0 account minimum

  • Large lineup of no-transaction-fee mutual funds

  • Good customer support

Reader favorite

Cons

  • Higher trade commissions

  • High short-term ETF trading fee

Read full review

Want more options? Here are the rest of our category winners for DIY investors:

Best Roth IRA robo-advisors for “manage it for me” investors

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.)
NerdWallet rating

Fees

0.25%

management fee

Account minimum

$500

Promotion

$5,000

amount of assets managed for free

The bottom line

Wealthfront takes the hassle out of IRA investing. The robo-advisor manages accounts by constructing portfolios out of low-cost ETFs, with a flat and low-cost fee structure that appeals to to investors seeking a hands-off approach. What’s more, the company has built client trust by offering free management on the first $5,000 invested (for NerdWallet readers).

Show pros & cons

Pros

  • Low-cost, hassle-free approach to IRA investing.

  • First $5,000 managed free (for NerdWallet readers).

  • Automatic rebalancing.

  • Free automated tax-loss harvesting.

Reader favorite

Cons

  • No large-balance discounts.

  • No access to human advisors.

Read full review
NerdWallet rating

Fees

0.25%

management fee

Account minimum

$0

Promotion

Up to 1 year

of free management with a qualifying deposit

The bottom line

With its low-cost ETFs, automatic rebalancing, extensive tax strategies and retirement advice, Betterment is a strong bet for retirement investors. Betterment’s planning tools include advice on “asset location” — which types of investments are best for different types of accounts — and investors can sync outside accounts, as well.

Show pros & cons

Pros

  • No account minimum

  • Extensive tax strategies

  • Robust goal-based tools

  • Free automated tax-loss harvesting

Reader favorite

Cons

  • Limited investment options

Read full review

Summary: Best IRA account providers

Broker
Best
for
Highlights
Commissions
Promotion
Account minimum
Start investing

Ally Invest

Ally
Active traders
Competitive commissions, no account minimum
$4.95
per trade
90 days of free trades with a qualifying deposit
$0

Merrill Edge

Merrill Edge
No account minimum
First-rate customer service
$6.95
per trade
Up to $600 cash bonus and 300 free trades with a qualifying deposit
$0

Wealthfront

Wealthfront
Hands-off investors
Manages first $5,000 for free
0.25% of account balance
per year
$5,000 managed free (for NerdWallet readers)
$500

E*Trade

E*Trade
No account minimum
Waives $500 account minimum for IRAs
$6.95
per trade; volume discounts
Up $600 cash bonus with a qualifying deposit
$0

TD Ameritrade

Overall
Commission-free:
290+ ETFs, 4,100+ funds
$6.95
per trade
Trade commission-free for 60 days and up to $600 cash bonus with qualifying deposit
$0

Betterment

Betterment
Hands-off investors
Offers phone access to human advisors for a higher fee
0.25%-0.40% of account balance
per year
Up to one year of free management with qualifying deposit
$0

Interactive Brokers

Active traders
Discounts for frequent traders; among best platforms
$0.005
per share;
min. $1, max. 0.5% of trade value
Special terms for clients 25 and younger
$5,000

Vanguard

Vanguard
Low cost
Commission-free: 70 ETFs, 2,800 funds
$2 to $20 per trade depending on account balance
None
$0

Charles Schwab

Charles Schwab
Overall
Commission-free:
240+ ETFs, 4,300+ funds
$4.95
per trade
$100 referral award for first-time clients
$0

Note: Some of these promotions won’t apply for first-time depositors, due to IRA contribution limits of $5,500 per year. We’ve tried to include 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.

Roth IRA FAQs

The Roth IRA has income rules for contributions. For 2018, the amount you can contribute begins to phase down at $120,000 in annual income for single filers and $189,000 for those married filing jointly. (For 2017, phase downs begin at $118,000 and $186,000.) 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 tells you your contribution limit.

With a traditional IRA and a Roth IRA, the contribution limit is a shared limit — you can contribute a total of up to $5,500 per year ($6,500 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.

You can contribute up to $5,500 a year, or $6,500 if you’re 50 or older, unless your contribution is reduced by the income limits above. That limit applies only to new contributions to the account, not rollovers.

Yes. You can combine 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 are 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 two mentioned above — which will manage your investments for you for a small fee.

A Roth IRA is a retirement account. Your contributions are made with after-tax dollars, which gives the account two unique benefits:

  • Unlike with other retirement accounts, contributions can be withdrawn at any time, tax- and penalty-free. But you may be taxed and penalized on early withdrawals of your investment earnings. Generally, early is defined as before age 59 ½. Read more about the Roth IRA withdrawal rules.
  • Your money grows tax-free, and distributions in retirement are not taxed. That means as long as you follow the rules for distributions, you’ll never pay taxes on the investment earnings.

You can dig into the details of these benefits and more in our Roth IRA guide, but think of the tax treatment this way: You’re paying taxes on the money you contribute now, locking in your current tax rate and skirting taxes in retirement. Because of that, a Roth IRA is best if you think your tax rate will be higher in retirement. Many younger workers or recent career changers are among those whose tax rates are likely to rise over time.

If your tax rate is higher now than it will be later, you might be better off with a traditional IRA, which gives you a tax deduction on contributions but taxes distributions in retirement. Read about the differences between a Roth and a traditional IRA.