A Roth IRA is an individual retirement account that could be a powerful vehicle to save for your retirement. Contributions are made with post-tax income (money you’ve already paid income taxes on), but your withdrawals in retirement are completely tax-free, no matter how large the gains.
A Roth IRA is also one of the most accessible retirement accounts, and usually takes just 15 minutes to open with most providers. Anyone with earned income can open and contribute to an account, and there are no age restrictions (even minors can open a custodial Roth IRA).
In this article, we’ll look at the best Roth IRA providers of May 2023, depending on your personal style of investing.
Best Roth IRAs
Most Roth IRA providers offer similar accounts with no trading fees. You can invest in traditional assets like stocks, bonds, mutual funds, and ETFs, although some only allow stocks and ETFs.
Carry Roth IRA
Who should use it? People looking for the best user experience, a more intuitive platform, and access to higher levels of customer support and educational resources. While anyone can open a Roth or traditional IRA with Carry, much of the platform is focused around serving business owners and self-employed individuals.
What can you invest in? Stocks and ETFs for now, will soon support self-directed accounts with access to alternative investments.
Minimum deposit: $0
Annual advisory fee: $0
Annual membership fee: $299 or $499
Carry’s Roth IRA is new to the space and comes with slightly different packaging than the other accounts listed here. There are zero fees on trades or for assets under management, and you receive higher levels of support and educational resources. Carry is an annual membership that costs either $299 or $499, but you get access to the entire suite of Carry products, including their flagship self-directed solo 401k, personalized financial plan, access to Ask an Advisor, and their entire library of finance and business master courses.
Who should use it? New Roth IRA investors would be best suited with SoFi’s simple user experience.
What can you invest in? Stocks, ETFs, and even cryptocurrencies. You cannot invest in mutual funds, futures, bonds, or forex.
Minimum deposit: $1
Annual advisory fee: $0
SoFi offers commission-free stocks and ETFs, free transfers, and no annual management fee to use their robo-advisor. That means you can freely choose between active investing on your own, or leaving it up to SoFi’s algorithm to make trades for you. If you choose to invest on your own, you also get complimentary access to a certified financial planner.
Who should use it? Inexperienced investors who want to invest passively through a robo-advisor. Once your funds are deposited, Betterment takes care of 100% of the investing for you through selected ETFs.
What can you invest in? The Betterment robo-advisor builds you a diversified portfolio of stocks and bonds.
Minimum deposit: $0 ($10 to start investing)
Annual advisory fee: 0.25% or $4 monthly
Betterment is a full blown robo-advisor. Instead of picking out stocks individually, you deposit money, and Betterment builds you a diversified portfolio of stocks and bonds based on your risk profile and retirement goals. It’s not ideal if you’re looking for more hands-on active investing, but for new investors who do have the experience in picking out their investments, Betterment provides an easy user experience to get started with your Roth IRA.
Who should use it? People who want more diversification and investment options than a typical robo-advisor.
What can you invest in? Like all other robo-advisors, Wealthfront invests your funds in US and foreign stocks and bonds. However, they also add dividend stocks and some alternative assets like real estate and natural resources.
Minimum deposit: $500
Wealthfront is another robo-advisor that invests your funds for you. However, they have a wider selection of investments, allowing you to diversify your portfolio further than other providers. Instead of just investing your funds in stocks and bonds, they also add real estate and natural resources, which can hedge against inflation and potentially give you higher returns. You’re also given the option to customize your portfolio and choose your own ETFs, which isn’t available with some providers.
Who should use it? People who like the idea of investing through a robo-advisor, but want more options than what the typical provider gives you.
What can you invest in? M1 is a hybrid between robo-advisor and traditional brokerage. You can invest through their robo-advisor feature, but can also create your own selection of stocks and ETFs.
Minimum investment: $500
M1 Finance gives you a little bit more control over your investments. Instead of just offering the option to use their robo-advisor, where they will invest your funds in a selection of pre-made portfolios, you also have the option to build your own collection of stocks and ETFs. There are no commissions or management fees, but the platform is built for long-term investing and discourages making frequent trades by limiting basic M1 account users to trade only once daily and only in the mornings.
Who should use it? People who want to invest in a wider variety of mutual funds, and need customer support through phone.
What can you invest in? ETFs and mutual funds. Vanguard is the world’s largest provider of mutual funds and has more funds than other brokerages.
Minimum investment: There’s no minimum deposit to open a Vanguard Roth IRA, but the mutual funds you want to invest in through your account may have minimum investments, ranging from $1,000 to $3,000.
As the world’s largest mutual fund provider, and the second largest provider of ETFs, Vanguard offers more investment options than many other brokerages. However, you cannot invest in individual stocks, and are limited to funds and ETFs. They charge a low advisory fee of 0.20%, and for the first 90 days, you won’t be charged at all. Also, they’re one of the few brokerages that still offer customer support by phone.
Who should use it? Advanced traders who want to trade derivatives and individual assets with access to more advanced financial products and charting tools.
What can you invest in? Stocks. No automated investing or fractional share investing.
Minimum investment: $0
Trading commissions: $0
TD Ameritrade is built for experienced investors who want to actively build their own portfolio and even trade derivatives. While there is more educational resources and research tools, the platform is geared towards DIY investors with more experience.
Who should use it? New and experienced traders will enjoy Fidelity’s well-rounded platform with both active investing and robo-advisor platform.
What can you invest in? Stocks, index funds, mutual funds, fractional shares.
Minimum investment: $0
Trading commissions: $0
Fidelity is one of the most well-rounded platforms to open a Roth IRA. You get access to zero-expense-ratio index funds and there is no minimum purchase on their mutual fund investments. Traders can actively build their own portfolios or choose to use Fidelity’s robo-advisor, Fidelity Go.
How to choose a Roth IRA provider
You should choose a Roth IRA provider based on the style of investing you’re looking to do, and the investment choices you’re looking for. New investors who want to invest passively could be better suited for a robo-advisor to build their portfolios for them based on their risk profiles and retirement goals. Experienced investors who want to build their own portfolios should find a platform that offers more DIY options.
What are the benefits of a Roth IRA?
The biggest benefit of a Roth IRA is tax-free withdrawals in retirement. Unlike a traditional IRA, you don’t receive any tax deductions on your contributions since a Roth IRA is funded with post-tax income. However, no matter how large your gains may be, your withdrawals are 100% tax-free in retirement.
Also read: How Does a Roth IRA Grow Over Time?
When can you withdraw from a Roth IRA?
You can withdraw your contributions made to your Roth IRA at any age without penalties or taxes. However, you cannot withdraw the earnings in your account until your Roth IRA is at least 5 years old, and you are at least 59½ years of age.
How much can I contribute to a Roth IRA?
For 2023, you can contribute up to $6,500 if you’re under 50 years of age, and $7,500 if you’re 50 years old or above. Learn more about IRA contribution limits here.
Who can open a Roth IRA?
Anyone with earned income can open and contribute to a Roth IRA as long as you don’t exceed the income limits set for the tax year. For 2023, you can contribute up to the entire contribution limit of $6,500 ($7,500 if age 50+) to a Roth IRA as long as your earned income is under $138,000. If your income is between $138,000 and $153,000, your contribution limit gets reduced. If your income is over $153,000, then you cannot contribute for 2023.