DollarGeek Presents:

Best Roth IRA Accounts of November 2020

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A Roth IRA (Individual Retirement Account) is one of the best places to save for retirement. Why? Because you put money in this account after paying income taxes on it and then your investments in this account grow entirely tax free. As long as you follow the rules, during retirement you won’t have to pay any tax on your withdrawals. The savings and benefits are great and it only takes minutes to open a Roth IRA account.

If you have a 401(k) at your workplace or another plan, it can make sense to save some extra cash in a Roth IRA account. As long as you take full advantage of your workplace retirement plan (company match, company stock discounts, etc.) Roth IRA’s will offer more flexible investment options in your account, not just a select amount of investments.

Check out some of the best Roth IRA providers below and learn how to get one step closer to your retirement goals in a tax friendly way.

Showing 1-9 of 9 accounts
OVERALL RATING:
(4.5)
on E-Trade's website

Minimum

$0

to open account

Fee

$0.00

per trade

Promotion

60 days

of commission-free trades with a deposit of $10,000 +

Minimum

$0

Fee

$0.00

per trade
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OVERALL RATING:
(4.5)
on Betterment's website

Minimum

$0

to open account

Fee

0.25%

management fee

Promotion

1 year

free management with minimum deposit

Minimum

$0

Fee

0.25%

management fee
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OVERALL RATING:
(4.5)
on Merrill Edge's website

Minimum

$0

to open account

Fee

$0.00

per trade

Promotion

300 free

stock and ETF trades for 90 days if you're a new customer + $100 to $600 cash bonus, depending on account size

Minimum

$0

Fee

$0.00

per trade
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OVERALL RATING:
(5)
on TD Ameritrade's website

Minimum

$0

to open account

Fee

$0.00

per trade

Promotion

500

commission-free trades + up to $600 with a qualifying deposit

Minimum

$0

Fee

$0.00

per trade
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OVERALL RATING:
(5)
on Charles Schwab's website

Minimum

$0

to open account

Fee

$0.00

per trade

Promotion

$100

referral award for first-time clients

Minimum

$0

Fee

$0.00

per trade
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OVERALL RATING:
(4.5)
on Interactive Brokers' website

Minimum

$5,000

to open account

Fee

$1

per share ($1 min)

Promotion

None

no promotions at this time

Minimum

$5,000

Fee

$1

per share ($1 min)
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OVERALL RATING:
(4.7)
on Wealthfront's website

Minimum

$500

to open account

Fee

0.25%

management fee

Promotion

$5,000

amount of assets managed for free

Minimum

$500

Fee

0.25%

management fee
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OVERALL RATING:
(5)
on Vanguard's website

Minimum

$0

to open account

Fee

$0.00

per trade

Promotion

None

no promotions at this time

Minimum

$0

Fee

$0.00

per trade
+ Show More Details
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OVERALL RATING:
(4.5)
on Fidelity's website

Minimum

$0

to open account

Fee

$0.00

per trade

Promotion

300

commission-free trades with qualifying deposit

Minimum

$0

Fee

$0.00

per trade
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Review: Best Roth IRA Accounts of November 2020

DollarGeek is here with you every step of the way when you’re selecting the best Roth IRA account. Find the best place to start growing your money for retirement in a tax-friendly way. 

Below you will find the providers that meet your investment style best. If you’re looking for some help with the investing side of your Roth IRA, make sure to look for a Roth IRA provider that is best for “hands off” investors. These providers will manage the investments for an annual fee. If you’re looking at managing your investments yourself, view the best for “hands-off” investors.

Best Roth IRAs for hands-off investors

Rating

Account Minimum

Management Fee

(4.7)
$500
0.25%
(4.5)
$0
0.25%

Best Roth IRAs for hands-on investors

Rating

Account Minimum

Cost Per Trade

(5.0)
$0
$0.00
(4.5)
$0
$0.00
(4.5)
$0
$0.00
(4.5)
$0
$0.00
(5.0)
$0
$0.00
(5.0)
$0
$0.00

Best for those who want assistance and a hands-off investing experience

Minimum Deposit

$500

APY

0.25%

OVERVIEW

Wealthfront is one of the frontrunners when it comes to robo-advisors or automated investing. Robo-advisors use Modern Portfolio Theory (MPT) to allocate funds within your retirement account. Wealthfront allows you to open an investment account with as low as $500.

Wealthfront provides several retirement accounts, including a Roth IRA. The robo-advisor requires you to fill a questionnaire to assess your risk tolerance and create an investment portfolio accordingly. Wealthfront invests in low-cost ETFs. Also, in accordance with specific portfolio milestones, Wealthfront rebalances your retirement portfolio.

The robo-advisor has a low portfolio management fee of 0.25%. It offers additional features, such as tax-loss harvesting and portfolio readjustment for its account holders.

WHY WE LIKE IT

  • Low initial account opening requirements, affordable portfolio management charges
  • Tax-loss harvesting with all accounts
  • Free financial planning

Best for investors seeking lower investment management options

Minimum Deposit

$0

APY

0.25%

OVERVIEW

Betterment is the poster boy of the automated investment advisory industry. The robo-advisor manages over $22 billion in assets-under-management. Betterment Roth IRA comes with special features, including goal-based portfolio recommendations, automatic contributions, portfolio rebalancing, and dividend reinvesting. 

Betterment Roth IRA allows investors to link external savings and retirement accounts with their Roth IRA. There are no minimum account requirements for the Betterment Digital plan and a 0.25% management fees.

Investors having $100,000 or more can opt for Betterment Premium, which comes with features such as unlimited access to a financial advisor, flexible portfolios, and guidance to manage major financial goals, expenses in life. Betterment Premium has a higher management fee of 0.40%.

WHY WE LIKE IT

  • Goal-based portfolio recommendations, automatic contributions
  • Portfolio rebalancing and dividend reinvesting features
  • Access to certified financial planners

Best for investors seeing investments in mutual funds and ETFs

Minimum Deposit

$0

Cost Per Trade

$0.00

OVERVIEW

Vanguard, one of the largest index fund and mutual fund houses in the US by asset size, is a good choice for anyone seeking a wide variety of investment options. Vanguard provides Roth IRA accounts for retirement savings.

When it comes to investing with Vanguard, one of the primary benefits is access to over 3,100 mutual funds and ETFs run by the investment management firm. As an investor, you can minimize your net portfolio fees. At the same time, Vanguard’s huge investment pool ensures that you can always find the right mutual fund or ETF for your portfolio.

Vanguard Roth IRA is ideal for passive investors seeking tax-free growth. 

WHY WE LIKE IT

  • Access to over 3,100 Vanguard mutual funds and ETFs
  • No trading charges for Vanguard mutual funds or ETFs
  • But high fund minimums could be an issue for most investors

Best for commission-free trading and no-cost index funds

Minimum Deposit

$0

Cost Per Trade

$0.00

OVERVIEW

Fidelity is a heavy-weight investment management firm when it comes to their net assets under management (over $3.3 trillion). However, that doesn’t mean that the broker doesn’t offer the right package for individual investors.

Our team compared Fidelity with other large investment managers and found some unparalleled features. First, Fidelity offers free trading, which means no portfolio funds are lost in trading fees. At the same time, investors can choose among 3,500 no-transaction-fee mutual funds or ETFs. Fidelity also provides access to zero-fee index funds.

On top of these features, Fidelity has a solid research recommendation module, providing investment suggestions from some of the leading market research firms.

WHY WE LIKE IT

  • Access to over 3,500 transaction-free mutual funds and zero-fees index funds
  • Commission-free trading for stocks, ETFs, options
  • Intuitive mobile app & trading platform

Best for active traders as well as beginner traders

Minimum Deposit

$0

Cost Per Trade

$0.00

OVERVIEW

E-Trade has built a reputation for its low-cost and, recently, commission-free trading platform. As an online broker, E-Trade offers an advanced trading platform for investors, especially those involved in active trading.

E-Trade allows investors to open a Roth IRA. It offers trading services for stocks, mutual funds, ETFs, options, bonds, and futures. Additionally, E-Trade provides access to over 4,400 no-transaction-fee mutual funds.

E-Trade offers extensive guides for both beginner and expert investors. The platform comes with research services from multiple firms available for free for all of its users. E-Trade provides both web and mobile-app based investment, trading services.

WHY WE LIKE IT

  • Over 4,400 zero transaction mutual funds
  • Educational resources for new as well as experienced investors
  • Robust mobile app and web trading platform

Best for customers seeking in-personal services

Minimum Deposit

$0

Cost Per Trade

$0.00

OVERVIEW

Merrill Edge packs the benefits of both online brokers and offline financial advisors in a single account. Customers can access a Merrill Edge advisor at over 2,500 Bank of America branches. If you’re an existing Bank of America customer, you can integrate and see all of your accounts within a single dashboard.

Merrill Edge Roth IRA offers commission-free trading for most financial instruments (stocks, mutual funds, options, futures, bonds ETFs), along with providing access to over 2,600 no-transaction-fee mutual funds.

Merrill Edge offers an extensive, free market research service to its customers. However, the account might be a bit limited for advanced traders, in terms of the available stocks.

WHY WE LIKE IT

  • Integration with Bank of America
  • Access to offline branches and in-person advice
  • Free, high-quality stock research services

Best for investors seeking premium research and high-end trading experience

Minimum Deposit

$0

Cost Per Trade

$0.00

OVERVIEW

Charles Schwab’s Roth IRA is one of the best Roth IRAs our team identified because of its strong research-driven recommendations. Charles Schwab offers free trading services, access to over 3,500 no-fee mutual funds, no-fee index funds, and trading experience to match some of the best technology-driven brokers.

The research recommendations from Charles Schwab caught our attention. The broker offers its individual ratings, along with ratings from Morningstar, Ned Davis, Credit Suisse, and more. Charles Schwab can easily connect with Google Assistant and Alexa for regular updates.

On top of these features, Charles Schwab allows its investors to purchase fractional shares, a feature sought by both beginners as well as experienced investors.

Schwab also provides robo-advisory solutions under Schwab Intelligent Portfolios.

WHY WE LIKE IT

  • Premium research recommendations
  • Robust trading platform
  • Access to a robo-advisory along with traditional brokerage services

Best for new investors seeking educational resources or assisted-trading services

Minimum Deposit

$0

Cost Per Trade

$0.00

OVERVIEW

TD Ameritrade is a Roth IRA provider that renders branch access, online trading and account management, and portfolio guidance services for its customers. The broker offers $0 trading for stocks, options, and over 4,000 mutual funds.

TD Ameritrade has a wide variety of investment options, including over 11,000 low-cost mutual funds. Also, TD Ameritrade has an extensive education module for new investors, which includes articles, videos, slideshows, quizzes, and much more. The platform also provides a virtual trading simulator for its users.

There are no account minimums with TD Ameritrade Roth IRA. You get access to high-quality research services with your account.

WHY WE LIKE IT

  • Extensive online education module for investors
  • Access to offline as well as online services
  • Financial advice and consultation for investors

Best for advanced stock traders seeking lower pricing and access to international markets

Minimum Deposit

$5,000

Cost Per Trade

$1

OVERVIEW

Interactive Brokers has been a popular name among active traders. The broker offers rock-bottom pricing for volume traders. Additionally, Interactive Brokers provides access to international securities.

Interactive Brokers Roth IRA is ideal for active traders or casual traders who intend to trade frequently. Their trading platform is one of the best in the market, coming with intuitive trading tools and solid research data.

Interactive Brokers is a suitable choice for margin traders, with rates as low as 1.5% plus benchmark rates. Interactive Brokers provide access to their Desktop Trader Workstation to both Lite as well as Pro users.

Interactive Brokers provides automated investor services in addition to a trading, retirement account. Investors can choose out of 70 plus portfolios, with fees ranging between 0.08% and 1.5%.

WHY WE LIKE IT

  • Robust trading platform
  • Volume pricing for advanced traders
  • Margin facilities available for both membership levels

Learn About Roth IRAs

Gain some clarity with our geeky insight.

What is a Roth IRA?

A Roth IRA is a tax-advantaged retirement investment account. A Roth IRA allows you to put money you've already been taxed on into the account. Once you have this money in your Roth IRA account you will select investments to make your money grow - think of stocks, bonds, mutual funds, ETFs, etc. The growth you accumulate in your Roth IRA and any withdrawals you make after age 59 1/2 are tax-free, as long as you've had the account for more than five years. Since the money you are funding your Roth IRA with is with after-tax dollars, the contributions you make into the account are not tax-deductible.

Can anybody open up a Roth IRA account?

If you earn income then yes, you can! But, unfortunately, not everyone can contribute to a Roth IRA. Your ability to make annual contributions to a Roth IRA may be limited, or even eliminated depending on your income level (modified adjusted gross income, or MAGI). Basically, if you make too much money you might be out of luck. Before you choose the best Roth IRA account, check out our Roth IRA contribution chart below and see how much you're eligible to contribute:

If your federal filing status is:

Your 2020 Roth IRA contribution is reduced if your MAGI is:

You can't contribute to a Roth IRA for 2020 if your MAGI is:

Single or head of household

More than $124,000 but less than $139,000

$139,000 or more

Married filing jointly or quailing widow(er)

More than $196,000 but less than $206,000

$206,000 or more

Married filing separately

More than $0 but less than $10,000

$10,000 or more

How much can you contribute to a Roth IRA?

The contribution limit for a Roth IRA in 2020 is $6,000 a year unless you are over 50 in which case, you can do up to $7,000.

What happens once I fund my Roth IRA with money?

It's important to remember that a Roth IRA is an investment account, which means you'll use that money to invest in things like stocks, bonds, mutual funds, etc to grow your money.

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

The biggest difference between a Roth IRA and a traditional IRA is how and when you get a tax break. You will either get your tax break now, or later. The tax advantage of a traditional IRA is that your contributions are tax-deductible in the year they are made. The tax advantage of a Roth IRA is that your withdrawals in retirement are not taxed because the money you've contributed to it has already been taxed before you put it in. Just remember the main difference between a Roth IRA and a traditional IRA is when you get a tax break.

Can you open a Roth IRA if you're under 18 years old?

As long as you earn income you can open up a Roth IRA. But, if you're under the age of 18 years old you will need to open a custodial Roth IRA. As the custodian, the adult will control the assets in the Roth IRA until the child reaches the age of majority. At that point, the account belongs to the child. Don't forget, any money you put into your Roth IRA must be "earned" income. In other words, parents can't just hand their child over a pile of money to put into a Roth IRA. Although, for example, if the child made $2,000 one summer mowing lawns, the parents could let the child spend that money and they could contribute the $2,000 on the child's behalf. Make sure to keep track of your W-2's or if you're working an odd job keep some type of record on file.

Is there a maximum age limit to make contributions to a Roth IRA?

There is no age limit on how old you can be to contribute to a Roth IRA.

How should I invest my money in a Roth IRA?

When you invest in a Roth IRA, you will have multiple investments to choose from like stocks, bonds, mutual funds, etc. We recommend you find a low cost index fund because it can diversify your investment and help you build wealth over the years, especially with the tax benefits of having it in a Roth IRA.

What is the advantage of a Roth IRA?

Aside from retirement accounts, when you invest your money in the stock market, you are usually taking after-tax dollars (think of money you take home from your paycheck after you've been taxed) and putting it into an investment like the S&P 500. If you invested, for example, $1000 into an S&P 500 index fund and 10 years later that grew to $2000, you would have to pay taxes on that $1000 profit when you sold it.

Let's recap - so you put after-tax dollars into the account, and then when you took it out you are being taxed again on your profits.

Well, one of the perks of a Roth IRA is that you will not be taxed when you withdraw that money (don't forget you must be at least 59 1/2 to withdraw or at least of had your Roth IRA for five years to withdraw principle)

Is a Roth IRA the same thing as a Roth 401(K)?

No, they are two different types of retirement accounts. Although both accounts are taxed the same so when you think of the word "Roth" think of the money you contribute into the account as being taxed already.

The main difference between a Roth IRA and a Roth 401(K) is that the Roth 401(K) is sponsored by your employer. If you happen to receive and employer match on your Roth 401(K), the match will not be tax favored so you'll have to pay the tax on that portion when you withdraw your funds during retirement.

Can I contribute to a Roth IRA and a Roth 401(K)?

Yes. You can contribute to both but the contribution limits will still apply to the Roth IRA.

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