The Best Brokers For Roth IRAs (Updated for 2020)
All reviews, research, news and assessments of any kind on The Tokenist are compiled using a strict editorial review process by our editorial team. Our writers nor our editors receive direct compensation of any kind to publish information on TheTokenist.io. Our company, Tokenist Media, is community supported and may receive a small commission when you purchase products or services through links on our website. See more information here about how we make money.
Whether you want to build up a nest egg or empower your portfolio, a Roth IRA or Individual Retirement Account offers smart options for those who want long-term tax benefits.
Since the money that you put into a Roth IRA is technically already taxed, the beauty is that you don’t have to pay taxes again when you take it out for retirement. There are also hidden benefits of Roth IRA conversion. While all Roth IRAs are designed this way, some brokers have even better features and rates for their customers.
Roth IRA investors should keep in mind that this is a long-term investment that stacks your money over time. As George Foreman famously said, “The question isn’t at what age I want to retire, it’s at what income.”
One thing that investors should look into is the minimum requirement for opening a Roth IRA with a broker. While some have no minimums, first-time investors may not read the fine print that requires up to $5,000 just to open an account. The first step many investors must take is how much they want to start investing so you know what kind of broker you want to go with.
That said, which companies are the best brokers for Roth IRAs? See our top picks and definitive guide to picking a Roth IRA broker below.
The 5 Best Roth IRA Brokers as of Today
What are the essential features of a Roth IRA broker? We based our picks off of the ideal broker for our investments.
We looked at return rates, successful investment strategies, customer satisfaction, and how much control investors have over their accounts. There are also helpful features such as educational courses that teach you more about Roth IRAs, which the brokers provide at no additional cost. These are just a few things that we targeted as we put our list together.
Without further ado, here are the top picks below:
1. Vanguard: Best Overall for Roth IRAs
When you need a firm to handle your money like experts, Vanguard does the best job with their investments. In addition, Vanguard never nickels and dimes clients for extra services or for what might be considered “full-service features.”
- Pioneer of the low-cost fund
- No account minimum
- Large number of mutual fund
- Great customer support
- Simple approach to account setup and investing
- Outperforms many other Roth IRA brokers
- Limited research and educational tools
- No trading platform (which doesn’t matter if you’re a passive investor)
Vanguard makes it very easy for beginners to set up and start a Roth IRA. In addition, the broker was the first to offer low-cost investment options with commission-free ETFs.
However, the biggest benefit of working with Vanguard is that they have outperformed many other brokerages year-after-year. One study found that 93 percent of Vanguard’s mutual funds and ETFs performed better than the average accounts from other brokerages.
Even though it’s proven that they outperform, Vanguard does not charge more for their services. They keep it low-cost and offer a variety of options for investing. They never charge you for sales commissions, sales loads, or any online account services. That may be a problem if you are looking for investing tools and educational research.
Vanguard makes its money on customers who want to be passive with their investing and likes to leave things to their experts. They don’t charge you more to offer higher quality investments, and you can choose what type of investments you want to build with your portfolio.
2. Ally: Best Rates for Roth IRAs
Ally got its start by being an online investment option for new and savvy investors. Their Roth IRA setup process is quite smooth and easy to get into, and as long as you don’t care about not having a physical location for your bank, Ally saves money by not having brick-and-mortar locations, thereby passing those savings on to customers.
- Earns consistently high interest rates
- Great mobile-friendly banking apps and investment tools
- No monthly fees
- Offers traditional savings and Roth IRAs
- No annual fees or maintenance fees
- No physical store locations
- Long wait times for customer phone support
- Limit to six transactions per statement cycle
As an online bank, Ally has one of the best reputations for its account options, mobile tools, and investment services. Ally Bank offers traditional and Roth IRA accounts.
The traditional IRA is easier to set up, as the bank outlines limits for its IRA investors. Basically, if you make over $133,000 a year, Ally can’t invest your money into a Roth IRA based on tax limitations.
However, as a small business owner, you can work with another investment account. Ally has an option to open a SEP IRA savings, and you aren’t charged any maintenance fees or other fees to open the account.
In the past year, investors earned a return of up to 2.50 percent, which is much higher than many other competitors. Ally also ensures that the rate is fixed with some of their accounts, which helps you know what to expect. You also see compound interest adding up daily on your account.
One big benefit of working with Ally is that they have 24/7 customer support by phone or online portal. Customers report some long wait times during peak times of day for their phone support, but you can always talk to their agents online.
If you’re an active investor, then Ally may not be the right answer for you. This is because they have a limit of six transactions per statement cycle. However, most investors don’t access their Roth IRA savings accounts this much, even in a single year or five years. They are made for long-term investing.
3. Merrill Edge: Best for Tools and Retirement Planning
Merrill’s Portfolio Story is the best tool for checking in on your investments and seeing your wealth grow. With that and other tools, Merrill Edge is the perfect platform for those who want to invest passively but also get an analysis of how they’re doing.
- Mobile-friendly app with portfolio analysis tools
- Better retirement planning tools than most other brokerages
- Tailored news feed with content from 35 different streams
- Named “Best Web Trading Platforms” and “Best for Beginners”
- Some trading capabilities are limited
- No commission-free trades unless you qualify
- Pushy towards financial advisors and full-service options
Merrill Edge has a lot of options for beginners and advanced investors. As for Roth IRAs, you’ll get some of the best tools to plan out your long-term investment portfolio. With Merrill’s Portfolio Story feature, you can personalize each customer and display how your assets are allocated. It also tracks your progress towards goals in an easy-to-use format.
In addition, Merrill’s investors can drill down for more information about a particular investment using another feature called Merrill’s Stock Story. The brokerage also went through a sweeping update for all of its mobile apps and now offers more guidance for beginner investors.
4. Fidelity: Low-Cost Platform for Young and Advanced Investors
With the introduction of Five Money Musts, Fidelity seeks to improve retirement planning for millennials and encourage new investors to join their brokerage. Their tools also help older investors with retirement planning and Social Security payment estimates.
- Easy account tools and retirement options
- Lots of retirement tools and education resources
- Retirement calculators with Social Security considerations
- Low transaction fes, plus order-routing technology
- Online customer service is quick to respond
- Ride wange of assets can be traded
- Mobile-friendly app
- Platform outages plagued Fidelity in 2017-2018
- Automatic dividend reinvestment
- Complicated menu system on desktop
For those who want to retire smart, Fidelity has some great tools to help you invest and learn about retirement planning. Their new focus has been on Five Money Musts, which aims to help younger people invest their money wisely for retirement.
Fidelity’s main bread and butter is advanced investment tools for those who want to retire and need a low-cost Roth IRA with lots of online help. The mobile app provides a ton of tools including educational courses and a retirement calculator.
You won’t pay much to start investing with Fidelity, and when you do, there’s an abundant amount of customer help. Members can also use an intuitive chatbot to get answers for most queries on the app.
5. TD Ameritrade: Everyone’s First Roth IRA Brokerage
TD Ameritrade has been around for a long time and offers multiple ways to invest for retirement. Roth IRAs are one of their best products because of the interest yields. With more than 300 ETFs traded commission-free and lots of ways to invest through your phone, you can keep track of your investments and make smart moves to improve your portfolio.
- Education courses help you learn more about investing
- Huge selection of commission-free ETFs
- Fixed-income investing tools, including 40,000 different bonds and 400 bond ETFs
- Income estimator tool shows interest and dividends for the next year
- Sometimes commissions are higher than at other brokerages
- Margin investors won’t like the rates at TD Ameritrade
- Tools are different depending on desktop and mobile
TD Ameritrade offers analysis to customers through various tools, both on their desktop and mobile platforms. Their retirement plans are historically tested and offer bountiful returns, and you can get financial consulting through their partners at FeeX. Most of the financial advisors tell clients to drop costly mutual funds and ETFs, then replace them with ETFs that have lower fees.
There are 300 ETFs that trade commission-free with TD Ameritrade. You can open an account on your own and manage it yourself, or you can use a variety of different tools including a retirement calculator.
The brokerage has received many awards including Best Web Trading Platform and Best Stock Trading App.
Should You Invest in a Roth IRA?
Roth IRAs offer fantastic investment options. They offer many advantages for those who want to plan for retirement and earn money on their investments, and you don’t have to pay taxes when you withdraw. Here are some other major benefits to this investment account.
While you do have to pay taxes on the money before putting it in your Roth IRA, you don’t have to pay any taxes when you withdraw. This also means that the earnings on your account can grow and gain interest without ever having to pay taxes on those returns. For example, you won’t have to deal with capital gains tax.
No Required Minimum
You don’t have to be of a certain age to withdraw money to due an RMD. This means that you can leave your Roth IRA to a grandchild or another underage beneficiary. The money continues to earn interest until they want to withdraw.
Withdraw at Any Time
You can withdraw from your Roth IRA whenever you wish, and you don’t have to pay a penalty or taxes. You can also use your Roth as an emergency savings fund if you ever need it.
Tax Diversification for Retirement
As you retire and start to withdraw from your accounts, your taxable income typically rises. This could increase your tax bracket as well. However, the money in your Roth IRA is not taxable, so it lets you distribute funds so you don’t push yourself into that higher tax bracket. This is a strategy used when you get older and RMDs start to kick in.
Do You Have the Right Income Status?
Roth IRAs are best for people who have modified adjusted gross income or MAGI that is under the limit. For 2020, that limit is set at $124,000 if you are single and $206,000 for married couples.
How Much Can You Fund to a Roth IRA
You can contribute as much as $6,000 before the age of 50, and you can increase that to $7,000 after you’re 50. You can also contribute your taxable compensation for that same year if it’s below the aforementioned permitted numbers.
How to Earn More with a Roth IRA
With any retirement account, you build up more wealth as you contribute. These accounts grow little by little over time due to stackable or compounding interest. With every year, your contributions earn interest, and your account balance rises.
With a Roth IRA, your money is invested in different markets, which allow your funds to grow faster and bigger. You can invest in ETFs, stocks, mutual funds, and a variety of other financial assets.