What’s worse than paying income taxes? Saving for your retirement, we say. Retirement planning is hard, from keeping your 401(k) balanced correctly to knowing how much you should be saving and what investment options you have.
A Roth Individual Retirement Account is one of the best ways to invest for your retirement. To avoid confusion, we’ll explain a Roth IRA account.
Traditional IRAs have taxes due initially as well as at withdrawal. Moreover, tax-advantaged accounts allow you to contribute before paying taxes on that money.
In contrast, a Roth IRA allows investment earnings to grow tax-free. Roth IRAs let you even escape taxes in retirement after withdrawal. Yet, saving for retirement, investing, and paying taxes using IRA can be confusing.
Top Picks For Roth IRA Accounts:
- Personal Capital – Overall Best Roth IRA Account On The Market, Editor’s Pick
- SoFi IRA – Very Popular Roth IRA among Cost-Conscious Investors
- Merrill Edge IRA – Best For Active Trading & Mutual Funds
- TD Ameritrade IRA – Most Recommended Option For Mobile Trading
- Ally Invest IRA – Excellent Roth IRA For Combining Trading & Banking
#1. Personal Capital – Overall Best Roth IRA Account On The Market, Editor’s Pick
Launched in 2009, Personal Capital is a pioneer digital investment manager. The company also offers transparent and reliable services for portfolio management as robo-advisors. In 2020, Empower Retirement took over Personal Capital. Today, Personal Capital stands out from other firms in the industry. They offer various free money management tools, cash flow, and retirement planning.
The firm lets US residents avail savings accounts with high-interest rates and some free banking services. Personal Capital Advisors is famous for its full-service investment managers. These need at least $100,000 account fees starting at 0.89% AUM.
The company combines a traditional financial advisor experience with automation. Signing up for a Roth IRA account here lets you access human advisors and an automatic tax-loss harvesting system. Since this level of service demands more funding, the firm charges a high annual management fee.
The provider is best for two main kinds of investors, falling on the opposite ends of the spectrum. These include DIY investors and high-net-worth investors. DIY investors sign up for Roth IRA accounts to use their free and extensive range of tools. These help them gather valuable insight into their portfolios. The company’s IRA accounts also appeal to high-net-worth individuals. This is because of their qualified human and excellent robo-advisor services.
Three Tiers of High-Tech Service: Personal Capital offers three tiers of services. These depend on how much you are willing to invest. With each level, the management fee lowers, and perks add up. The three tiers are Investment Service, Wealth Management, and Private Client. The Investment service plan is entry-level and offers access to a panel of financial advisors. They will help you with financial planning and investment review. In this tier, you get a customized portfolio using only ETFs. Plus, you get rebalancing, and tax optimization only for $100,000 – $200,000.
In the second tier, wealth management, there are some extra features to the ones in the first tier. The tier includes two specified advisors for the advisor’s team. You can access specialists to assist you with compensation, stock options, and insurance. In the middle tier, you have a portfolio with added individual stocks only for $200,000 – $1 million.
Private client, the last tier includes all the features of the other tiers and more. It offers access to wealth planning services such as tax and estate issues and private banking. For $1 million or more, this tier offers portfolio construction with individual bonds. Of course, you must have enough assets and private equity investments.
Sophisticated Portfolio Construction: Personal Capital builds portfolios using ETFs. These are the firm’s collection of individual stocks. At advanced tiers, these ETFs turn into bonds and private equity investments. Only the portfolios with more than $5 million in the account can access private equity. Irrespective of your tier, Personal Capital provides you with Smart Weighting.
It is more of a re-weighing option to review your portfolio to get more returns without higher risk. This way, the company looks at your portfolio holdings by style, size, and industry.
Variety of Tools: The provider offers various tools to help you test your portfolio. These tools help you understand how much you need in the future for defined expenses, net worth estimates, and more. The firm does not charge any fee for using these tools. Thus, anybody can enjoy them. Some available tools include a net worth calculator, financial roadmap, and retirement planners. Moreover, fee analyzer and personal strategy tools are also available.
Access to Human Financial Advisors: One of the company’s top features is it offers you access to an actual person. By signing up for their account, you can have a team or two specified advisors per your tier subscription.
- Best for the tax-loss harvesting, higher-net-worth clients
- Free tools for money management
- Customized financial planning with CFP(R) advisors
- 24/7 customer support
- Accessible live phone customer service
- User-friendly website
- High account minimum of $100,000
- High investment management fee of 0.89% AUM
#2. SoFi IRA – Very Popular Roth IRA among Cost-Conscious Investors
SoFi is an acronym for “Social Fiance,” a US-based finance-tech company launched in 2011. Four Stanford business school alumni built this company in San Francisco. Its purpose was to help young adults with their finances.
The fintech company specializes in student loan refinancing. But, since 2018, it has expanded to the broker space. Today, SoFi is the only free robo-advisor offering Certified Financial Planning to all its members.
The US Securities, FINRA, and Exchange Commission (SEC) regulate SoFi. Moreover, SoFi Invest is a subsidiary that offers discounted or zero-fee brokerage services.
At Present, SoFi Invest provides active and automated investing services. Active investing services include self-directed accounts to trade stocks, ETFs, and crypto without advisors. Contrastingly, automated investing is a robo-advisory service offering financial handling of your investments.
SoFi IRA portfolios base on five risk levels and span diversified low-fee ETFs. The diversified portfolios include fee-free ETFs and low fees. But, SoFi does not provide some portfolio personalization services that its competitors offer.
SoFi Invest is a safe option for individuals looking to sign up for a Roth IRA account. Top-tier financial authorities regulate the company, and it offers more than $500,000 in investor protection. This is under the SIPC protection scheme.
Low Cost: The biggest selling feature of SoFi Invest is its low cost. Since the company doesn’t charge a management fee, customers won’t object. In the industry, the standard management fee is about 0.25% or $25 per $10,000 invested. Yet, SoFi does not cost its customers any fee. Thus, it is in the elite league of the few robo-advisors that charge nothing. SoFi offers portfolio constructions with 11 ETFs. These represent small-cap ETFs and the total bond market, among others. SoFi invests some of its funds besides the Vanguard funds. These funds are cheap, enabling you to construct a portfolio with little investment. Between cheap funds and free management, you can expect to pay less than $10 per year for every $10,000 invested.
Access to Certified Financial Planners: Zero management fee does not mean SoFi will skimp on services. Instead, it sets you up with certified financial planners (CFPs). These planners follow the fiduciary code to provide the best financial advice. So, CFPs can help answer investment and financial plan development questions.
Easy to Get Started: Signing up for a SoFi Invest account is simple. The system will ask you a few questions about your investment goals, one of five model portfolios, and when you need money. Once you’re finished, you can transfer funds into your SoFi account by linking it with a bank account. The software allows instant verification and directs you to set up a recurring deposit. The process requires $1 to get started. So, signing up for SoFi Invest is simple and cheap.
Cash Management Account: SoFi Automated Investing does not include a cash management account. Since members already have an account, opening a cash management account and moving money is quick. SoFi Banking account also provides banking functionalities. These include money transfers, mobile banking, a debit card, and so on, without a monthly fee.
- Best for active traders, ETF investors, fractional shares, and crypto
- Access to Certified Financial Planners for all clients
- Offer individual and joint taxable accounts
- Provide Roth IRA, SEP IRA, traditional IRA, and rollover IRAs
- 0.05% fund expense ratio
- $1 account opening fee
- $5 fee to start investing
- Access to SoFi lending, self-directed investing, and cash management
- Review portfolio before giving personal information
- No portfolio customization
- No tax loss harvesting
#3. Merrill Edge IRA – Best For Active Trading & Mutual Funds
Merrill Edge is a digital brokerage firm. It provides online trading, investing, education savings, retirement, and investment research solutions. The company was established after 2009 when Bank of America acquired Merrill Lynch.
The fintech firm offers planning of taxable income and tax deduction. It also provides investor education resources and step-by-step investing guidance. The education center of Merrill Edge provides financial advice through videos and webinars. It uses the Morningstar Investing Classroom alongside other tools.
The company has its base in Charlotte, North Carolina. It has millions of active clients and owns assets worth multimillion under management.
The brokerage is a solid choice for investors looking for amazing research and services. Merrill Edge offers access to financial advisors at around 2,000 Bank of America locations. Moreover, it does not charge commissions on ETFs and stocks.
Newer investors can find Merrill Edge’s educational resources useful. It also has valuable options for advanced traders with the MarketPro trading platform. Thus, Merrill Edge is the perfect choice for new and experienced investors.
MarketPro Trading Platform: Merrill Edge has an amazing authorized trading platform, MarketPro. It offers several useful features for active traders. On MarketPro, you can create watchlists, set trade alerts, and view your portfolio in real time. Moreover, the MarketPro trade has a simple interface making it easier for brokers to operate. Using MarketPro, you can chart 104 different technical analysis studies. Also, you can use its charting tools to stream data for visualizations.
Research and Education: Merrill Edge offers excellent research on mutual funds, ETFs, and stocks. As for funds, the company integrates studies from Morningstar and Lipper. Also, an in-house team offers reports on the market, stocks, and related economic news. Each fund page has extensive features. These include charts, financial data, research reports, prospectus information, and more. Thus, investors can use videos and articles to explain several areas. These include college planning, retirement, and personal finances.
Available Account Types: Merrill Edge offers a variety of account types. These include joint and individual accounts and a traditional or Roth IRA. It also provides less-common account types, including SEP IRA, SIMPLE IRA, and solo 401(k). 529 plans on the website let you save for your child’s education. In contrast, you can choose to invest on your children’s behalf via custodial accounts. Also, you can use managed portfolios service with pricing starting at 0.45% of assets. But, the management fee rises to 0.85% if you seek help from a human advisor.
Integration with Bank of America (BOA): You can link your account with a Bank of America account. You can do this without even signing up for BOA’s Preferred Rewards program. The feature is handy when instantly transferring money from one account to another.
- IRAs, college savings plans, and managed portfolios
- Link Bank of America accounts
- No commissions or minimums for self-directed accounts
- Managed portfolios starting at 0.45% annually per $10,000 invested
- Access to MarketPro trading platform
- Enhance the performance of your portfolio with Portfolio Story
- No precious metals or crypto
- High advisory fees for robo-advisor account
#4. TD Ameritrade IRA – Excellent Roth IRA For Combining Trading & Banking
We suggest TD Ameritrade for pro traders who want the best research option and a well-equipped desktop trading platform. TD Ameritrade was founded in 1975, and today, the company is one of the biggest stockbrokers in the US.
Several top authorities regulate TD Ameritrade. These include CFTC, FINRA, and SEC. Newer investors will find the platform useful due to its research and education sections. The brokerage enables you to trade as many types of securities as any competitor. Therefore, TD Ameritrade remains a fine pick for almost anyone.
The company is safe for investors thanks to its excellent track record. As the company is listed on the stock exchange, discloses its financials, and has a banking background, you will have a great experience using its Roth IRA account.
Variety of Trading Platforms: TD Ameritrade gives you a trade ticket to quickly execute trades. When you want to trade and go, the feature comes in handy as it is easy for one-off orders. Moreover, the firm has two platforms: the web platform and the Thinkorswim platform. The web platform is a classic and offers all the essentials. These include trading stocks, bonds, ETFs, mutual funds, and more. Besides, the Thinkorswim platform ups the ante. It includes forex and futures options and the web platform’s tradable securities. You can easily trade some of these securities 24 hours a day for five days a week.
Trading Simulator: The paperMoney is the company’s simulator that lets you practice your trading skills. It also enables setting users up with $100,000 in virtual money and a margin account to improve their purchasing power. The simulator is free for customers, and it uses the Thinkorswim platform by default. For non-customers, the simulator is available on a 60-day trial run.
Investment Selection: The company offers more than 3,700 no transaction fee mutual funds. The broker enables you to watch your funds for several aspects. Each fund has its own page that explains the fund’s key points. These include performance, holdings, etc.
Commission-Free Stock and ETF Trades: The firm does not charge commissions on stock and ETF trades. This is unlike other online brokerage services. Thanks to this feature, the brokerage stands among the industry’s leaders. The company charges $0.65 per options contract, like Merrill Edge.
- Best for mobile, beginners, brokers for investor education
- No minimums
- Multiple account types
- Large investment selection
- Commission-free stock, ETFs, and options
- $0.65 per options contract
- Well-designed mobile application and web-platform
- Great customer support
- Automated and managed portfolios are expensive
- Trading platforms can be difficult to navigate
#5. Ally Invest IRA – Best for Combining Trading and Banking
Ally Financial Incorporation (ALLY) is a US-based stockbroker regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). The company is a digital financial services firm offering full-service automated investment providers.
The company offers personal and mortgage loans, savings, checking accounts, money market, consumer credits, certificates of deposit (CDs), securities brokerage, and investment advisory services.
Thanks to the Ally Bank consumer banking business, Ally services more than 2.5 million deposit customers. Ally Invest offers brokerage services spanning managed and self-directed investment products to approximately 506,000 customer accounts involving assets of $17.4 billion.
In 1919, Ally was founded as GMAC, a sector of General Motors Acceptance Corporation. Initially, the company operated with a mantra of helping automotive dealers to maintain and finance their inventory. With passing decades, the firm has expanded to offer a couple of other financial services.
Ally enables customers to access more than 2,000 exchange-traded funds (ETFs), a number verified by the company. Various partner providers are behind this ETF number, including iShares, WisdomTree, and Vanguard. Furthermore, Ally does not offer its proprietary funds for investments.
Well-diversified Portfolios: Ally’s robo-advisor allows you to take a spin even before signing up for an account. So, you can witness how Ally can help you with your portfolio customization using your risk tolerance and time horizon. Furthermore, Ally’s portfolios are built with more than a dozen ETFs having low costs. They are a mixture of almost the same funds with lesser or greater proportions. Using these funds, Ally offers four different portfolios: core, income, tax-optimized, and socially responsible portfolios. Typically, all the portfolios contain six to nine funds in them. They also have a mixture of bond and stock funds based on time and risk horizon.
No-Fee “Cash-Enhanced” Portfolio: If you want to avoid high advisory fees, then Ally’s advisor is the best choice. However, it has a caveat. You will be put in its “cash-enhanced portfolio,” which shows that it will hold almost 30% of your assets in cash at a given time while investing the remainder. Due to this option, you can avail yourself of a robo portfolio without spending additional fees. Nevertheless, you will have to pay for the expense ratios of any funds available in your portfolio.
Low-Cost ETFs: Ally constructs your portfolio using some of the cheapest ETFs on the market. These include ETFs from low-cost leaders like iShares and Vanguard. Therefore, the annual expenses range from 0.03 to 0.15% of assets, with a majority below 0.10%. In simpler terms, you will have to pay $3 to $15 per $10,000 invested.
Low Account Minimums: Ally Invest offers a low account minimum to customers. So, you open your account, spending $0, while it just requires you to deposit $100 in your account to begin investing. Hence, new investors have a chance of getting started quickly and adding a modest amount of money to begin investing.
- Best for existing Ally customers, beginning and cost-conscious investors
- Low costs and fees
- Easy to use and intuitive platform
- Foreign exchange trading is available
- Earn interest on cash balance
- Financial consolidation between personal finance, investing, and banking
- 24/7 customer support via phone, chat, and email
- $50 transfer out fee
- $25 IRA closing fee
- $0 to open an account, $100 to start investing
- No cryptocurrency or future tradings
- Mobile app does not support all trading products
Buyer’s Guide – What Factors Should You Consider Before Buying a Roth IRA Account?
Figuring out which online broker to open a Roth IRA with can be a challenge. Not all Roth IRA providers are equal, and when saving for retirement, it’s crucial to know what to look for.
On that note, the factors to consider are cost, services with tools and educational resources, and more. Besides, evaluating the right place to open an IRA account can take some time — hours of comparing and extra fees or hidden charges if you do it wrong.
In addition, you can follow up on certain points we have mentioned before choosing the best provider for a traditional IRA or Roth IRA account.
- Tax Benefits
If the filing deadline is approaching and you are looking for tax savings, what you can do is open an IRA account as soon as possible. For the years 2021 and 2022, you can contribute $6,000 to an IRA account. Moreover, if you are above 50 years, you may contribute $7,000 to an IRA.
A tax deduction may help you realize your savings to offset the cost significantly. You can save as much as $1,000 or more based on whether your state imposes income tax laws and your income tax bracket.
- Understand Your Financial Services Options
Traditional or retail investment brokerage companies still exist. However, now these firms offer various services while emphasizing brokerage. You can avail yourself of investment advisors and experts by signing up for their service.
These advisors can help you with evaluating the possibility of every investment with up-to-date data so that you can invest mindfully. In addition, the advisors are trustworthy and understanding with you and can make investments on their client’s behalf.
However, retail investment brokers do not build this relationship and show themselves as someone by your side in the volatile world of investing. Traditional brokers charge the highest commissions and fees for customized services for transactions. Therefore, these firms are best for investors who prefer to allow someone with specific expert advice and recommendations on their finances and investments.
- Discount Brokers
Discount brokers use seminars and webinars to expand their services and spread understanding of the market. Vanguard and Fidelity are some of the popular discount brokers.
These brokers can help you with investing by building active partnerships. It means you will have to do some homework before asking for advice.
- Financial Trust Companies
Independent retirement custodians or financial trust companies also offer self-directed IRAs to manage large pension funds. These firms hold private real estate, notes, equity, and other non-exchange traded assets, including stocks, mutual funds, and bonds.
Alternative assets are a source of greater diversification for self-directed IRA customers. While trust companies offer potential advantages of alternative asset investments, they do not provide tax or investment advice. Therefore, these firms administer investments as third-party providers as custodians. Hence, when investing in a self-directed IRA with trust companies, you should do your research. For beginners, we do not advise doing so.
- Bank Offer IRAs
Similar to discount brokers, banks also provide customers with self-directed IRA accounts. In this case, banks offer research and analysis to their clients whose fee is not dependent on investment advice. Therefore, clients who prefer banks for IRA accounts are also on their own. The banks may charge you a fee for managing your investments as financial advisors for a percentage of your assets.
Regardless of the type of firm you choose to open your IRA account, you should be clear with them about fees and commissions beforehand. They may offer varying charges depending upon the size of your assets they are managing and the volume of your transactions.
How We Made This List
You’re wondering if opening a Roth IRA with some online brokers is worth it or if you should open one at all. We’ve researched and narrowed down the best Roth IRA accounts to help you pick the best one for your needs.
We analyzed dozens of investment services to help you save money in the long run. We gave each option a thorough vetting from major banks and brokerages before making our favorite picks for a Roth IRA in the US.
We’ve compared major U.S. online brokers and robo-advisors, so you don’t have to do the math yourself. Our reviews explain each provider’s strengths and weaknesses in every category.
We have tried to offer our readers an independent assessment of robo-advisors and providers. So, you have the right information for making sound and informed judgments. Thus, we followed strict guidelines to ensure editorial integrity.
Per our research strategy, we collected data from financial providers and observed them through demonstrations. Also, we conducted questionnaires and combined their results with demonstrations of providers. All these factors helped our assessment according to which we score each provider.
The final output of our research was a list of the best Roth IRA accounts in the US to help you with retirement savings. In reviews of all the five services, we explain their business services and top features.
What We Looked For
We outlined some benchmarks that helped us in finding the best IRA providers. Our team’s assessment helped us weigh each factor in order of importance for the final results.
- Advisor Credentials: In this category, we checked if the advisor provides in-person communication. This communication may be in the form of chat, video, phone, email, or text. The ones with these features gained the highest ratings. If any provider was operating through email or chat/text only, we did not include it in our list. Also, we checked the provider’s credentials. Only providers with advisors certified as financial planners spiked our interest. We gave the lowest rating to advisors who are brokers related to series 65 or less. The best companies were the ones offering each client a dedicated advisor. Moreover, this included unlimited access and scheduled check-ins.
- Services Offered: We tried to choose the financial advisors that offer everything an in-person advisor would. We ensured that these providers offer basic services. These include tax, basic estate plans, business plans, and debt reduction. Moreover, our list contains services that manage accounts of different types at various brokerages. Apart from that, we were concerned with providers’ tax strategies. We chose the ones providing direct indexing and other specialized tax-free methods.
- Fees: We gave the lowest ratings to providers charging a 1% annual fee. In contrast, we picked the financial providers with less than 0.30% annual fees. Also, we checked for account fees for transfers, trades, or closures. We picked services that did not charge for transfer, trades, closure, or setups.
- Portfolio Construction: Our goal was to select companies offering custom services as per the client’s needs. Our list contains companies that let you include any investment accessible through brokerages.
- Expense Ratios: Checking the investment expense ratios for a portfolio was very important. We ensured that the expense ratios of the providers we feature cost 0.10% or less on average.
- Account Minimum: Our team considered the money a financial provider needs to start. We tried to find the providers with an account minimum of $10,000 or less.
- Customer Support: We considered website usability and customer service availability as important factors. We picked the providers offering 24/7 customer support and informative websites.
FAQs About Roth Individual Retirement Accounts
- How to open a Roth IRA account?
Signing up for a Roth IRA account is easy as long as you have decided what kind of account you are investing in. If you are willing to handle your assets on your own, you can open a Roth IRA account at an online broker, offering you the tools for managing retirement investments. If not, you can leave everything in the hands of experts and open a Roth IRA at a robo-advisor to manage your finances.
- Why should I choose a Roth IRA?
Roth IRA has several advantages that are specific among tax-advantaged retirement accounts. By opening a Roth IRA account, you won’t have to pay a dime of taxes on transactions from a Roth IRA because it saves your already-taxed money. In addition, it shelters your retirement investments from capital gains. With Roth IRA, you can make free contributions transactions except for any tax, penalty, or earnings, unlike tax-advantaged retirement accounts.
- What kind of IRA do you need?
You can choose from various special IRA accounts that target different investors, including non-working spouses, entrepreneurs, and clients preferring alternative asset classes such as crypto or gold. So, the options for IRA accounts span wide from spousal IRA, inherited IRA, SEP IRA, and SIMPLE IRA to self-directed IRA and rollover IRA.
Conclusion: Which Roth IRA Should You Get?
Retirement accounts are a big deal, and the lack of savings can be devastating and lead to financial hardship in your elder years. While using a simple, high-interest savings account is tempting, experts agree that the best option is an Individual Retirement Account or IRA.
A Roth IRA is an especially attractive choice as it offers two main benefits: tax-free withdrawals and tax-free growth. You earn interest on your investments free of taxes, including all intermediate years when the money stays in the account.
You don’t even have to withdraw the earnings if you decide not to spend them. Even when you make withdrawals from the account, you never have to pay taxes on those withdrawals again in your life.
Still, choosing and using a Roth IRA account is a big deal, and it deserves careful consideration. There are a lot of important details, rules, and choices that you need to be aware of.
Since not every person is a professional in managing their investments and trading, we have found and reviewed the best Roth IRA providers. So, you don’t have to figure out all the pieces independently. Use our Roth IRA guide to learn the specifics of how Roth works and find resources, including reviews, to help make your decisions more informed. We have even suggested the best Roth IRA accounts according to your needs.
Everyone needs a retirement plan, and a Roth IRA is one of the most popular ways to save for the future. So, choose one of the best and most reliable Roth IRA providers and get started today!