DollarGeek Presents:

The Best Roth IRA Accounts of September 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)
Open Account
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)
Open Account
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)
Open Account
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)
Open Account
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)
Open Account
on Interactive Brokers' website

Minimum

$5,000

to open account

Fee

$0.01​

per share ($1 min)

Promotion

None

no promotions at this time

Minimum

$5,000

Fee

$0.01​

per share ($1 min)
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OVERALL RATING:
(4.5)
Open Account
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)
Open Account
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
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OVERALL RATING:
(4.5)
Open Account
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
+ Show More Details
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OVERALL RATING:
(4.5)
Open Account
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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Review: The Best Roth IRA Accounts of September 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. 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 a annual fee.

Rating

Account Minimum

Management Fee/Cost Per Trade

Best For

Wealthfront Roth IRA

★★★★★ 4.5/5

$500

0.25%

Hands Off Investors

Open Account

Vanguard Roth IRA

★★★★★ 5/5

$0

$0

Fee Conscious Investors

Open Account

Fidelity Roth IRA

★★★★★ 4.5/5

$0

$0

Low Cost Funds

Open Account

E-Trade Roth IRA

★★★★★ 4.5/5

$0

$0

Stock Research

Open Account

Betterment Roth IRA

★★★★★ 4.5/5

$0

0.25%

Hands Off Investor

Open Account

Merrill Edge Roth IRA

★★★★★ 4.5/5

$0

$0

Customer Service

Open Account

TD Ameritrade Roth IRA

★★★★★ 5/5

$0

$0

Stock Research

Open Account

Charles Schwab Roth IRA

★★★★★ 5/5

$0

$0

Stock Research

Open Account

Interactive Brokers Roth IRA

★★★★★ 4.5/5

$0

Varies

Frequent Traders

Open Account

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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