Playbook, Charles Schwab and Fidelity top Benzinga’s list this year for the best Roth IRA accounts.
A Roth Individual Retirement Account (IRA) is a powerful tool that can help you save for retirement while potentially reducing your tax burden in the future. With tax-free growth and tax-free withdrawals in retirement, a Roth IRA can help you build a solid financial future. Opening one of these accounts can help you increase your nest egg but with different maximums, limits and investment options than other retirement accounts.
The best Roth IRA accounts have minimal or no account fees, offer excellent retirement planning tools and have reliable customer support. Start planning for your future today with these leading Roth IRA account providers.
Quick Look: The Best Roth IRA Accounts
Best Roth IRA Accounts
The best Roth IRAs provide access to a variety of investment options with support to guide you in knowing how you’re doing saving toward retirement and what you need to do to improve. Here’s a look at the leading options.
1. Best for Tax Strategies While Maximizing Retirement Savings: Playbook
You have a great deal to consider when planning for retirement while balancing the funds you need today. The app aids in asset allocation so you know whether you should be placing savings in an IRA, 401(k), health savings account (HSA) or account that you’ll pay taxes on this year. Optimizing where you place your money can increase your savings by thousands of dollars throughout your 40-plus years of employment and beyond. The account benefits high earners the most because their tax liability has the potential to be far higher than an individual with an average earning amount.
Why We Love It: You can save toward retirement while lowering your taxes now to enjoy the life you want. With Playbook, you can get a guideline for what account type to place your money in for the best tax benefits and savings.
2. Best for Holistic Approach to Retirement Savings: Charles Schwab IRA
Enjoy access to a variety of investment vehicles with your Roth IRA account, including stocks, bonds, certificates of deposit (CDs), exchange-traded funds (ETFs) and mutual funds. Charles Schwab is a leader in investing because it offers simplified trading techniques with tax-efficient advice. You can learn about your risk and make investment updates accordingly to form a powerhouse account that will help you live the way you want to in retirement.
Why We Love It: With Charles Schwab, your Roth IRA account comes with support like tax calculators and real-time market data to help you make more informed decisions about when to buy, sell or hold onto your investments. Plus, you’ll have access to retirement specialists who are ready to help you with any questions or concerns you may have about your ROTH IRA account.
3. Best for $0 Minimum to Get Started: Fidelity Investments
While you might see the value that a Roth IRA can have, you also might not have the upfront cash required to get started with most investment banks. But at Fidelity, you can open your account and fund it slowly as you have the money. The platform also offers flexibility in how you manage your account, including robo-advisor, self-directed or advisor-guided. If you have any questions, there are helpful articles and features to guide you in planning for retirement. Plus, their Intuitive and interactive chatbot can answer many basic questions fast and 24/7.
Why We Love It: Fidelity is user-friendly and ideal for those getting started with investing or ready to advance their skills thanks to its account features and support.
4. Best for Account Type Options: Merrill Edge
Enjoy the freedom to invest in a variety of investment types, including stocks, ETFs and options. You can choose between a self-directed account or a guided investment account. If you choose guided, you can use the robo-advisor or an actual advisor. Regardless of the account type you select, you’ll have access to retirement calculators and insights to help you in planning for retirement. Customer service is available 24/7.
Merrill Edge has partnered with Bank of America to allow customers to manage all their financial assets in one place, providing a seamless experience for those with accounts at both institutions.
Why We Love It: For those who want to be actively involved in their investments, Merrill Edge offers the tools and access to your account you need.
5. Best for Hands-Off Investing: Betterment
Some people just want to place money in an account and know that it is the best investment option based on their needs. If that sounds like you, Betterment is a great option. When your account has less than $20,000 in it, you’ll pay a $4 per month fee. After that, it’s 0.25% annually until you reach $100,000, at which point you’ll pay an additional 0.15%. But with those fees comes access to certified financial planners. Automate your retirement strategy with the tools Betterment provides.
Why We Love It: The automated retirement investment strategy helps many people save for retirement without the headaches of checking on their accounts regularly or wondering whether they are saving in the right places.
6. Best for Robo-Advisor Account: Wealthfront
Wealthfront is one of the leading robo-advisors in the industry. While the account does not offer access to a traditional advisor, you’ll have the tools you need to get started investing your assets yourself. Fill out a questionnaire to help inform your risk tolerance and begin trading funds in up to 12 asset classes. Get access to a variety of investment vehicles, including ETFs, real estate investment trusts (REITs) and stocks.
Why We Love It: The goal-tracking feature helps you see where you are with saving and whether you need to make adjustments to your contributions.
How a Roth IRA Works
A Roth IRA allows you to place after-tax dollars into a retirement account. You won’t enjoy any tax savings for that year, but you can grow your investment tax-free and withdraw the funds tax-free starting at age 59½ as long as the account has been open for five years.
These accounts are best for people who expect to be in a higher tax bracket during retirement. That way, you can pay your taxes on the funds now to maximize tax savings.
Passing your account to heirs also offers them tax-free withdrawals, which can be a nice perk when passing inheritance.
You will not be required to take distributions at a certain age, which means you can hold the funds and keep growing them tax-free until you need them. If you need the funds before age 59½, you can use them toward a first-time home purchase, health insurance, higher education, medical expenses, disability claims, IRS tax levy payments and more.
How Do Roth IRAs Differ from Traditional IRAs?
Roth IRA accounts have after-tax contributions and are better for those expecting to be in a higher tax bracket in retirement, while traditional IRA accounts have pretax contributions and are better for those expecting to be in a lower tax bracket. Both have contribution limits, but Roth IRAs have income limits that can decrease contribution maximums. Additionally, Roth accounts have no mandatory distributions, while traditional accounts require distributions starting at age 73.
Here’s an overview of how Roth IRA differs from Traditional IRA and 401(k).
| Features | Roth IRA | Traditional IRA | 401(k) |
| Tax benefits | Tax-free growth and qualifying withdrawals | Tax-deferred growth and tax-deductible deposits | Employer-sponsored savings, save & invest pre-tax earnings |
| Age requirements | No requirement | Must be under 70½ years old to contribute | 21 years old |
| Contribution limits | $7,000 for those under 50 years old, $8,000 for those 50+ | $7,000 for those under 50 years old, $8,000 for those 50+ | Employees can contribute up to $23,000 (not including employer match) |
| Income limits | Depends on marital status and adjusted gross income | No | No |
| Taxes on withdrawal | No | Yes | Yes |
| Taxes on deposits | Yes | No | No |
| Early withdrawal penalty | Yes, pay taxes on amount plus 10% penalty | Yes, in some cases a 10% penalty | Yes, pay a penalty |
| Required withdrawals | No | Yes, by age 70½ | Yes, by age 70½ |
How to Choose the Best Roth IRA Brokerage Account for You
Consider these factors that will determine the ideal account and provider for you before you open a Roth IRA account.
- Account types: Find the best account type that matches your investment needs and preferences, such as self-guided, guided or robo-advisor.
- Additional features: Look to see what extra features are available from the account before signing up.
- Calculators: If you aren’t sure how much you’ll need for retirement, retirement calculators can help guide you.
- Account integration: When you have various retirement accounts, integrating them on one platform will give you a clearer picture of your savings.
- Fees: Depending on your account size, you can lose a great deal of your investments each year to fees.
- Account minimums: How much you contribute each year might vary and you might not have a ton to place in the account when opening it so be sure to review account minimums before getting started.
- Investment access: Some accounts give you more access to various types of investments than others so review those before getting started.
Maximizing Your Tax Advantages With a Roth IRA
The most influential reason to open a Roth IRA is to maximize your tax advantages. When you believe your tax bracket will be higher in retirement or you want greater flexibility for when you’ll take distributions from your account, go with a Roth IRA.
Frequently Asked Questions
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The best Roth IRA is Charles Schwab because of its options and flexibility. Reddit users also recommend Fidelity and Vanguard.
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You cannot withdraw from a Roth IRA until it has been open for at least five years, even if you’ve reached the 59½ age requirement. That’s known as the five-year rule.
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The best type of fund for a Roth IRA is usually one that offers a diversified portfolio of low-cost index funds or exchange-traded funds (ETFs). These funds can help maximize long-term growth potential while keeping fees and taxes to a minimum.
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The growth of a Roth IRA over 20 years depends on factors such as initial investment amount, annual contributions, rate of return, and fees. Consistent contributions to a diversified portfolio can lead to significant growth, with monitoring and adjustments recommended to maximize potential and take advantage of compounding interest. Consulting a financial advisor can help in creating a strategy to achieve growth goals.
