A Roth IRA is an excellent tool to use when planning for the future. Unfortunately, finding the best place to open a Roth IRA can be overwhelming because many companies offer retirement accounts.
We’ve researched the best Roth IRA providers in terms of investment fees, options, and platform functionality. Our top choice is Betterment since it helps newer investors create a portfolio and get advice at a low cost.
However, there are other options that offer excellent service without a steep price tag. If you want to know where to open a Roth IRA, this guide can help.
Where is the Best Place to Open a Roth IRA?
Saving for retirement is an essential part of long-term wealth creation. But, you may find it hard to sort through all of the online brokerages.
We’ve identified the top options for a variety of needs. Here are the best places to start a Roth IRA and grow your wealth.
One of the first robo-advisors in the space was Betterment. As a robo-advisor, Betterment helps you build a balanced portfolio with a mix of stock and bonds.
The platform is terrific for novice investors who need assistance. It’s also great for busy individuals who don’t have time to manage their portfolios.
People who don’t want the responsibility of deciding which mutual funds or exchange-traded funds (ETFs) to invest in can benefit from Betterment.
Upon opening an account, you complete a simple questionnaire that tells Betterment your risk tolerance, retirement timeline, and available funds. The platform then goes to work based on that information.
Think of it as having a financial advisor without the expensive fees.
- No minimum investment required
- Management fee of 0.25 percent of your portfolio
- Fee increases to 0.40 percent if your portfolio is over $100,000
- No trading fees
- Specialized portfolios (i.e., socially responsible and income portfolios)
- A full suite of banking products
Learn more: Read our full Betterment review
Betterment is best for those looking for automated investment management with minimal costs.
2. SoFi Invest
SoFi is a popular student loan refinance company. What many people don’t know is that they are also one of the best choices for opening a retirement account.
With SoFi Invest, the company brings a low-cost, no-nonsense philosophy to investing.
This platform offers two choices, including self-directed and automated investing. The former works like any other online broker but allows for buying fractional shares of stock through their Stock Bits program.
The automated choice is a robo-advisor, similar to Betterment. It helps you create a portfolio of diverse ETFs and rebalances it to ensure your portfolio is on target to reach your goals.
SoFi Invest Features
- $1 minimum investment required for either account option
- No trading or account fees
- Ability to invest in fractional shares
- Professional career and salary guidance
- Discounted rates on SoFi loans
SoFi Invest is best for people wanting free help with their investments. Furthermore, if you’re a self-directed investor, you can utilize that option and still have no monthly fees.
3. M1 Finance
M1 Finance is an increasingly popular brokerage to start investing. They are a hybrid robo-advisor and self-directed investing platform.
This platform manages investing through what they call “pies.” These pies consist of up to 100 individual stocks and ETFs.
You can either select a pre-made pie constructed by their experts or create your own. Investors can have as many pies as they want in their accounts.
Pies often consist of partial shares of stocks that align with your goals. Think of it as having a mutual fund or ETF geared toward your specific needs.
- No fees to create pies or to trade within them
- You can create as many pies as you want
- $500 minimum investment requirement for retirement accounts
- Dynamic rebalancing of your pies
- Only offers individual stocks and ETFs in pies
Learn more: Read our full M1 Finance review
M1 Finance is best for investors who want guidance but also want to select their own investments.
Are you looking for a non-traditional way to save for retirement? Look no further than investing in real estate.
Fundrise is a crowdfunded real estate investing platform that lets people invest in commercial and multi-family real estate.
Real estate investments often require large sums of money or expertise. Fundrise changes that by allowing you to pool money with other investors.
In turn, this allows you to open a retirement savings account with as little as $10.
The platform helps you choose suitable investments that are split between debt and equity.
Keep in mind that fees are a little higher with real estate. Fundrise charges an 0.85 percent fee, which is competitive.
If you need to complement what you’re doing in the stock market, a site like Fundrise can be a fantastic option.
- Average annual return, net of fees, of 10.63 percent as of 2021
- Can invest with as little as $10
- No hidden fees
- Invest in both commercial and multi-family properties
Learn more: Read our full review of Fundrise
Fundrise is best for people who want additional diversity with their investments at a low cost.
If you have minimal funds to invest and are new to stocks, Stash is one of the best Roth IRA providers. It is a micro-investing app that lets people invest small amounts of money to buy fractional shares of stocks or ETFs.
Stash will suggest stocks or ETFs based on your goals and risk tolerance. It’s also possible for you to select your own stocks.
You can choose from approximately 100 individual stocks and 75 ETFs. While they are all well-known, this does mean that you won’t have access to the entire stock market.
You only need $0.01 to start investing with Stash. New users who deposit at least $5 will receive $5 when they open an account.
- $0.01 minimum investment for shares priced up to $1,000 per share
- $0.05 investment requirement for shares worth over $1,000 per share
- $1 per month charge to have an account
- A full suite of banking products
- You can purchase fractional shares of stock
- Lots of research tools to help new investors
- You can use Smart Portfolio and let Stash invest for you
Learn more: Read our full Stash review
The Stash app is best for those who are new to investing, have minimal funds, and want to invest in well-known companies.
Vanguard is an incredibly popular investment broker and one of the best self-directed Roth IRA providers you can find.
The company is so well-respected that its funds appear at many robo-advisors and on various 401(k) plans.
Vanguard charges no commissions for online stock trades. Their mutual funds and ETFs are second to none. However, the website is lacking in tools.
The company is best for buy-and-hold stock investors. Active traders will likely find the tools at Vanguard insufficient and may need to look elsewhere to manage their investing needs.
- No minimum balance requirement
- Some funds require $1,000 – $3,000 to invest
- $0 maintenance or trading fees
- A full suite of investment products
- Less than robust trading platform
- Robo-advisor services available to those with $3,000 or more to invest
Learn more: Read our full Vanguard review
Vanguard is best for those who want to self-manage low-cost investments.
Fidelity is a terrific alternative to Vanguard for low-cost investments. The full-service brokerage has grown as one of the top Roth IRA companies over the last few years.
This company offers free stock trades, has thousands of commission-free ETFs, allows you to invest in options, and more. These perks make them one of the best Roth IRA options for investing.
In fact, their ZERO index funds have just a $1 minimum initial investment requirement and a zero percent expense ratio.
Fidelity also offers robo-advisor services through Fidelity Go. There is a 0.35 percent management fee with no minimum balance requirement.
- $0 minimum balance requirement
- Thousands of fee-free investments to choose from
- Robust trading site
- 200 branches nationwide
- A full suite of investment products and financial planning tools
Fidelity is best for both new and seasoned investors who value low-cost investing.
What is a Roth IRA?
A Roth IRA is an individual retirement account that lets you make contributions with after-tax dollars. This allows you to shelter distributions from any tax burden when taken during retirement.
Anyone who earns income from a job can open a Roth IRA and contribute funds.
You can make a maximum contribution of $6,500 for the 2023 tax year or $7,500 if you’re over 50. Contributions are not tax-deductible.
However, qualified withdrawals are tax-free when you’re retired as long as you’re at least 59 1/2 and have participated in the plan for over five years.
If you’re a high-income earner, your contribution limits might be reduced. It’s best to speak with a tax advisor if you fear this might be the case for you.
Contributions can be withdrawn penalty-free if you are under 59 1/2 years of age and the withdrawal is for any of the following reasons:
- To pay for a qualified education expense
- If you’re using it for a first-time home purchase
- You become disabled
- To pay for qualified expenses related to a birth or adoption
- You are paying for medical expenses or health insurance if you’re unemployed
The withdrawal must be Roth IRA contributions, not gains, to qualify.
What’s the Difference Between a Roth and Traditional IRA?
There is a lot to consider when saving for retirement. Paramount in that is deciding between a traditional IRA or a Roth IRA account.
Here are the key differences between the two account types:
- Traditional IRA contributions are generally tax-deductible. Roth IRA contributions are not.
- Withdrawals from a traditional IRA are taxable as ordinary income upon retirement. Qualified Roth IRA withdrawals are tax-free income.
- You can withdraw Roth IRA contributions at any time. Withdrawals from a traditional IRA incur a ten percent early withdrawal penalty (when taken before age 59 1/2) and are taxed as ordinary income.
- There are income limits to qualify for a Roth IRA, but traditional IRAs do not have a limit.
Traditional IRAs are also subject to required minimum distributions (RMDs) at 70 1/2. Roth IRAs do not have the same requirement.
Those differences aside, both retirement plans operate similarly and are tax-advantaged account options. They both allow you to contribute retirement savings to invest in the stock market, real estate, and more.
Can I Change My Traditional IRA to a Roth IRA?
Yes, you can convert a traditional IRA into a Roth IRA. However, this is a taxable event.
You must pay taxes on the money you move when you do the conversion. Contributions to a traditional IRA are never taxed.
Roth contributions must come from after-tax savings. This means you must pay taxes.
What Are The Benefits of a Roth IRA?
There are numerous benefits to having a Roth IRA. The key benefit is that, upon retirement, Roth IRA withdrawals are tax-free.
Here are a few other attractive features:
- You can withdraw contributions tax-free.
- There is no minimum withdrawal requirement at a certain age.
- Your earnings can be withdrawn federally tax-free if it has been five years since your first contribution.
- Roth IRAs provide tax diversification when paired with traditional 401(k) contributions.
The lack of immediate tax benefits aside, there are many reasons why a Roth IRA is worth considering.
Can I Have Two Roth IRAs?
Yes, you can have multiple Roth IRAs. In fact, you can have as many IRAs as you want. It’s fairly common for people to have multiple retirement accounts.
Regardless of how many IRAs you have, as of 2023, you can only contribute up to $6,500 in combined Roth and Traditional IRA contributions per year.
At Frugal Rules, it’s our objective to help you make informed decisions that will help you achieve financial freedom on your timeline.
As a former stockbroker, I personally dealt with numerous brokerages, from discount to full-service. This helped inform our research to determine the best Roth IRAs.
We considered numerous factors, including:
- Access to low-cost or commission-free trading
- Ability to get direction from trained financial representatives
- Easy-to-use platforms
- Educational and research tools
- Low account minimums
- Solid reputation
- Variety of investment choices
The brokers on this list did not influence our rankings. There are a plethora of other brokerages that offer Roth IRA accounts, though the ones on our list are the best ones in the space.
Many online brokerages offer retirement accounts. As you look for a good fit, those with lower fees and more investment options qualify as the best Roth IRA accounts.
If you’re new to investing, a robo-advisor or a platform that offers fractional investing might be best. For seasoned investors, a traditional brokerage could be a better option.
What do you look for when choosing an IRA provider?
SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA/SIPC, (“Sofi Securities”). Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) SoFi Crypto is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of SoFi Digital Assets, LLC, please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Bank, N.A.