A Roth IRA can be one of the best retirement accounts to use when planning for the future. Unfortunately, it can be overwhelming to determine the best place to open a Roth IRA because there are dozens of companies that offer retirement accounts.
We’ve compared many of them to find the best Roth IRA providers in terms of investment options, fees, and platform functionality. Our top choice is Betterment since it helps newer investors construct a portfolio and get advice at a minimal cost.
However, there are other suitable options that offer excellent service without a steep price tag. If you need to know where to open a Roth IRA, this guide will help answer that question.
7 Best Roth IRA Providers
The benefits of a Roth IRA are immense, but it’s important to choose an online brokerage that meets your needs. Here are the best places to open a Roth IRA.
One of the first robo-advisors in the space was Betterment. As a robo-advisor, Betterment helps you build a portfolio with a mix of stock and bond funds.
This is terrific for novice investors who need assistance. It’s also great for busy individuals who don’t have time to manage their portfolio.
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, timeline, and available funds. The platform then goes to work based on that information.
- No minimum investment required
- Your account is managed for 0.25 percent of your portfolio, or 0.40 percent if over $100,000
- No trading fees
- Specialized portfolios are available, including socially responsible investing and an income portfolio
- 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 Wealth
SoFi Wealth is a popular student loan refinance company. What many people don’t know is that they are also one of the best Roth IRA providers. With SoFi Wealth, the company brings a low-cost, no-nonsense philosophy to investing.
The platform offers two options, 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 Wealth Features
- $1 minimum investment required for either account option
- No trading or management fees
- Ability to invest in fractional shares
- Professional career and salary guidance
- Discounted rates on SoFi loans
SoFi Wealth is best for people wanting free help with their investments.
3. M1 Finance
M1 Finance is an increasingly popular brokerage to start investing. They are a hybrid robo-advisor and self-directed investing platform.
M1 Finance 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 account.
Pies often consist of partial shares that align with your goals. Think of it as having a mutual fund or ETF geared towards 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. You can open a retirement account with as little as $10.
The platform helps you choose suitable investments that are split between debt and equity. Fees are a little higher with real estate. Fundrise charges an 0.85 percent fee, which is competitive.
- Annual return, net of fees, of 9.47 percent in 2019
- 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. Stash 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 requirement for shares priced up to $1,000 per share
- $0.05 investment requirement for shares priced at 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
- Impressive educational library 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 brokerage and one of the best self-directed Roth IRA providers you can find. The company is so well-respected that their 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, it’s best for those who have minimal needs since the website is lacking in tools.
If you have a long-term view of investing and embrace a low-cost approach, Vanguard is worth considering.
- No minimum balance requirement, but 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 broker has really grown as one of the top Roth IRA companies over the last few years.
Fidelity offers free stock trades and has thousands of no-fee ETFs. This makes them one of the best Roth IRA options for fee-free investing. In fact, their ZERO index fund choices 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
Fidelity is best for both new and seasoned investors who value low-cost investing.
What is a Roth IRA?
Roth IRAs work similarly to traditional IRAs and is one of the best retirement accounts to consider. Anyone who earns income from a job can open a Roth IRA and contribute funds.
You can contribute up to $6,000 for the 2020 tax year, or $7,000 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.
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 use the funds to pay for unreimbursed medical expenses or health insurance if you’re unemployed
The withdrawal must be contributions, not gains, to qualify.
Traditional IRA vs. Roth IRA – What’s the Difference?
Many consider a traditional IRA vs. a Roth IRA and wonder which is the best investment account. Here are the key differences:
- Traditional IRA contributions are generally tax-deductible. Those to a Roth IRA are not.
- Withdrawals from a traditional IRA are taxable as ordinary income upon retirement. Qualified Roth IRA withdrawals are tax-free.
- You can withdraw Roth IRA contributions at any time. Withdrawals from a traditional IRA are always subject to a ten percent early withdrawal penalty (when taken before age 59 1/2) and taxed as ordinary income.
Traditional IRAs are also subject to required minimum distributions (RMDs) at 70 1/2. Roth IRAs do not have the same requirement.
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 funds. 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 requirement to withdraw a minimum amount at a certain age
- Earnings can be withdrawn federally tax-free if it has been five years since your first contribution
- Provides tax diversification when paired with traditional 401(k) contributions
The lack of immediate tax benefits aside, there are a lot of 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 2020, you can only contribute up to $6,000 in combined Roth and traditional contributions per year.
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 may be best. For seasoned investors, a traditional brokerage could be a better option.
What do you look for when choosing a Roth IRA provider? Would you ever invest in non-stock investments in your IRA?
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