The Best IRA Accounts
- March 23, 2018 - We’ve updated this page with the latest numbers and information for IRA accounts, expanding and retooling our methodology in the process. E-Trade, Charles Schwab, and TD Ameritrade remain top picks. Another former pick, Scottrade, has been absorbed by TD Ameritrade. We’ve added Vanguard and Ally Invest to round out our recommendations.
The Best IRA Accounts
If you’re already familiar with IRAs and just want the low-down on the best accounts, you can skip this intro and head straight to Our IRA Reviews. For those that are new to retirement savings (or need a quick refresher), we’ve taken a minute to cover the IRA basics before jumping in.
What is an IRA, and how does it work?
There are a few ways to save for retirement. Chances are you’ve heard of a 401 (k); that’s the employer-sponsored plan, where a cut of your paycheck gets deposited every month. For those that don’t have access to a 401 (k) plan through work, or anyone who wants to supplement it, an IRA (individual retirement account) is the most common way to save for retirement.
Anyone can open an IRA. They are, at their core, simply accounts for long-term investments. One key factor sets IRAs apart from other investments, though: They come with tax benefits. The two main types of IRA — traditional and Roth — are mainly defined by the different tax perks they receive.
|Traditional IRA||Roth IRA|
|Tax Benefit||Contributions are tax-deductible, so you save money on the front end. When you take money out in retirement, withdrawals are taxed (similar to receiving a paycheck).||Contributions are nondeductible (taxed), so you’re not getting a break on the front end. When you take the money out in retirement, though, withdrawals are tax-free.|
Rollover IRAs are the third type you may encounter. “Rolling over” simply means transferring funds from an existing retirement account — usually a 401 (k) — into a new Roth or traditional IRA. Note that direct transfers are tax-free, but if the company cuts you a check to deposit yourself, it’ll be taxed: 10% for an IRA to IRA rollover, and 20% for other account types.
The first step to opening an IRA (even before finding the right company) is choosing the best account type for you. We spoke with Alison Norris, a Certified Financial Planner at SoFi Wealth, who recommends Roth IRAs for younger earners and traditional for those that are closer to retirement. “Traditional IRAs allow you to get a current tax break. They’re great when you’re in your peak earning years and need a tax deduction pronto,” she says. “Roth IRAs, which allow your money to grow tax-free over time, are especially beneficial when you are young and early in your career.”
Not sure which category you fit into? We suggest reaching out to a financial planner or retirement planner. Even if you only use them at the outset (while you’re setting up your IRA), getting a financial professional involved can help maximize your savings. Try plugging your address into the Society of Financial Service Professionals’ search tool; it will provide a list of credentialed, reputable advisors in your area.
The second step is deciding how to manage your IRA funds. For a hands-on approach, you may choose your own stocks, bonds, and mutual funds to invest in, and then sit back and let them build. For those that would rather leave the investing to the pros, there are actively-managed and automatic accounts. These charge a fee (usually between 0.30 and 1%) for an advisor or algorithm to select promising investments and makes trades for you.
Answering these initial questions will help you find the best IRA account for your needs. Our top picks offer something for everyone.
Funds, Options, Futures?What in the world are mutual funds, ETFs, and options? We cover all the need-to-know terms in our What to Know section.
- If you’re opening your first IRA, for example, we recommend starting with E-Trade. It provides ample learning tools for new users, and has the best customer support of any company we tested.
- More seasoned investors might prefer Charles Schwab. Its advanced trading platform has a steeper learning curve, but the company is an industry leader for investment research and insights.
- On the opposite end of the spectrum, Vanguard will take investment decisions off your hands completely. Its Target Retirement Funds boast some of the lowest account management fees in the industry, and it consistently garners high returns on its in-house mutual funds and ETFs.
- Maybe your 401 (k) plan is ending, and you just need a quick, painless rollover into an IRA account. In that case, we recommend TD Ameritrade for its easy process and rollover perks.
- For those that prefer to keep all their banking and investing in one place, we suggest looking at Ally. It offers free accounts and competitive low trading fees, coupled with a comprehensive suite of banking services.
How We Found the Best IRA Accounts
We started with a list of 17 popular IRA providers. These come from "best of" lists, financial resources like NerdWallet and The Motley Fool, and news outlets including Forbes, US News, and CNNMoney. We made sure that all the major players were included — big names like Wells Fargo and Vanguard — as well as up-and-comers like Ally Bank and Voya Financial.
All of our contenders are full-service IRA providers. However, to make sure our picks were as applicable to as many people as possible, we didn’t look at financial advisors or wealth management firms that target high-net-worth clients. We also nixed robo-advisors like Wealthfront and Betterment, which only offer automated investing. Automation isn’t a bad thing — it’s an affordable way to have a professionally managed portfolio — but we prefer companies with more diverse offerings and resources. Plus, if you are interested in automated investing, most of our top picks offer it in some form. E-Trade and Charles Schwab have offerings with deposits as low as $5,000. (By comparison, most human-managed accounts require deposits of $20,000 or more).
We also required required SIPC membership. The SIPC (Securities Investor Protection Corporation) provides investment insurance up to $500,000 per person — ensuring that investors have something to fall back on if their firm fails. Failures are extremely rare, but you don’t want to be left high and dry if one does happens.
Ally, Capital One, Charles Schwab, Chase, Citigroup, Edward Jones, E-Trade, Fidelity, Merrill Edge, Stifel Nicolaus & Co, T. Rowe Price, TD Ameritrade, TIAA, US Bancorp, Wells Fargo, Vanguard, Voya Financial
We looked for IRA companies with strong resources and customer support.
Because everyone has unique IRA needs, there isn’t one universal “best” account. The most important features will vary depending on your account type and investing style. But there are some traits that the best IRA providers share: namely, excellent customer resources and low fees across the board.
For starters, the best IRA companies are totally upfront with account and fee information. They should provide all the details you need to make an informed investment. Our favorites, like E-Trade, make it easy to find everything online. We were never more than a click or two away from the materials we needed. Others stood out for having ample customer support tools. We especially love Ally’s live chat feature, which had all our questions answered in just a few minutes.
A few companies didn’t make the cut, though: Chase, Citigroup, and Stifel all have bare-bones websites and are lacking in support channels. They left us feeling totally under-informed (which is never how you should feel about a big financial decision). Then there was Capital One — we’re still waiting for its email response, a week later.
We dug into the fine print to find the IRA accounts with the best value.
Keep in mind: Upfront information isn’t just for convenience’s sake. Before signing up for an IRA, it’s important to fully understand the account requirements and fee structure. Financial advisors warn that ‘hidden’ fees (read: fine-print) can eat away at your savings over time.
Be on the lookout for yearly account maintenance fees, fees to close the account or transfer money out, fees to trade, and management fees for professional oversight. These are the most common we see. All in all, you should pay no more than 1% of your account balance in fees, and ideally much less.
Our top picks offer low (or no) fees across the board. In fact, it’s more or less free to open an IRA with E-Trade, TD Ameritrade, SoFi Wealth, and Ally. They require $0 down and charge $0 in account maintenance fees. Charles Schwab and Vanguard do have some expenses, but there are ways to avoid most of them. We eliminated companies like US Bancorp and Voya Financial, that charge upwards of $40 per year in account maintenance fees alone.
We also gave preference to IRA providers with low trading fees. High fees — like T. Rowe Price’s staggering $19.95 per trade — leech money from your retirement savings while you’re trying to grow them. Our top picks make active investing much more affordable: Starting at just $4.95 per online trade with Ally and Charles Schwab.
Then we looked for standout services and perks.
All told, we found eight IRA companies that strike the right balance between robust account options, great customer service, and low fees. Any one of them would be a solid choice. Our our five favorites — E-Trade, Charles Schwab, Vanguard, TD Ameritrade, and Ally — were a cut above the rest, with some unique features for specific IRA accounts. The best one for you will depend on your investing style, your level of investment knowledge, and the account type you need. Keep these considerations in mind as you read our IRA reviews.
The Eight IRA Accounts We Tested
- Charles Schwab
- Merrill Edge
- TD Ameritrade
- Wells Fargo
The Best IRAs at a Glance
|Minimum Balance Requirement||Account Mainenance Fee||Online Trading Fee||Stands Out For...|
|Charles Schwab||$1,000¹||$0||$4.95||In-house research|
|TD Ameritrade||$0||$0||$6.95||Rollover perks|
¹Or $100 automatic monthly deposit
²Vanguard will waive the $20 annual fee if you sign up for its e-delivery service
³Depending on account balance and number of trades
Our Picks for the Best IRA Accounts
If you’re looking to open your first IRA (or you’re new to investing in general), we recommend getting started with E-Trade. The company’s excellent resources and customer support make it ideal for less-experienced savers. Once you’re past the initial learning curve, it also has the tools to grow with you: plenty of solid investment options for hands-off savers, and a decent trading platform for those who want to get more involved with their funds.
Before leaping into investments and trading options, it’s important to fully understand the IRA basics. Anyone feeling shaky about what kind of IRA to open, what rules apply, or what channels to invest in will be able to find their footing with E-Trade. We found its FAQ to be more extensive and informative than others, with answers to questions we didn’t even know we had (like, “What are the differences between rollovers and transfers?”). In addition, its knowledge base includes in-depth articles on more complex subjects like “Understanding required minimum distributions” and “Tax planning for specific types of investments.”
Of course, some finance discussions are better in-person, and E-Trade’s phone support and live chat are available 24/7. When we tested the chat feature, looking for information about account fees, we received a polite and helpful response within five minutes, as well as a link to the company's complete fee schedule. After unanswered emails and bare-bones FAQs from some other companies, we really appreciated E-Trade’s promptness and transparency.
E-Trade’s resources wouldn’t stand up without its solid account offerings. IRA customers enjoy $0 account minimums and maintenance fees, and a low $6.95 online trading fee (among our top picks, only Charles Schwab and Ally offer cheaper trades). For investors who want a managed portfolio without the $20,000 active-management minimums, E-Trade’s Core Portfolio offers automated investing starting with just $5,000 down and a 0.3% management fee. Those are some of the lowest requirements we saw for a professionally selected portfolio.
And, like we said, E-Trade grows with you. Its web-based trading platform offers basic research and tools that will help beginning IRA users manage their investments. If you want a step up from its basic platform, you can use OptionsHouse, E-Trade’s software-based platform. OptionsHouse is a full-featured trading hub, with personalized charts and real-time market updates. For serious traders, we still prefer Charles Schwab’s platform (which integrates its top-tier research and insights), but E-Trade does a better job laddering you up from novice to investment expert.
If you have a bit of experience trading and want to manage your IRA funds more actively, then we highly recommend Charles Schwab. This company is known for its industry-leading research and advanced trading platform, and it impressed us on both fronts.
Schwab’s in-house research has earned it a top spot since we began reviewing IRAs in 2015. While most of our top picks provide market news and updates, Charles Schwab stands head-and-shoulders above for its analysis. Its staff of experts works to contextualize the company’s market insights so that customers can easily make sense of the data and use it to inform their trades. On its trading platforms, Schwab’s own investment analyses are displayed side-by-side with outside research, allowing for easy comparison.
Customers have three investment platform options: StreetSmart.com and Street Smart Central (both web-based), and Street Smart Edge (a downloadable desktop-based option). Of the three, StreetSmart Edge is the most robust. It includes personalized watch lists and trend charts, trade suggestions based on the company’s in-house research, and real-time news and market monitoring. The whole affair is customizable — from layout and color scheme to strategy suggestions — so it can be tailored to fit your workflow. We did find that StreetSmart Edge has a pretty steep learning curve, with lots of moving parts to master. But that’s to be expected with any advanced trading platform; users with previous market experience will get the hang of it fairly quickly.
Schwab makes trading affordable, too, with fees starting at just $4.95 per transaction (the lowest of our top picks, matched only by Ally). Customers can also take advantage of extensive fee-free options; Schwab offers more than 200 commission-free ETFs and its OneSource list has thousands of fee-free mutual funds. Like our other front runners, it keeps operating costs low, with no monthly or annual account maintenance fees. It’s worth noting that Charles Schwab requires $1,000 down to open a new IRA — but customers can avoid that fee by setting up a $100 automatic monthly deposit.
Because of its relatively high initial deposit and steep learning curve, we don’t recommend Schwab for first-time IRA users or beginning traders. Customers just getting into the investing game will likely prefer E-Trade or ALLY for their excellent learning resources and customer support. But for those who trade more actively within their IRA, Schwab’s quality of market research and customizable platform can’t be beat.
Some people just want to prepare for retirement but won’t be comfortable tackling the stock market or taking risks with their retirement savings — and if that sounds like you, then we recommend looking into a Vanguard Target Retirement Fund.
A target retirement fund is sort of a happy medium between robo-advising and having an actively-managed IRA. It allows you to put your savings in one of Vanguard’s broad, diversified index funds, which are curated to become more conservative (read: less risky) the closer you get to retirement. These funds enjoy the benefits of professional management without the high costs and deposit requirements associated with individual advisors. Initial deposits start at just $1,000, and the average Vanguard fund only charges 0.12% in fees — very low compared to funds from most other providers.
That last part is a huge reason we like Vanguard for this type of investing. According to our experts, cost is a vitally important factor to look at when planning your retirement:
The most important feature to consider is cost, which has the potential to significantly impact returns over the long term. There is absolutely no reason to pay more than a few basis points to own an index fund. As a reference, on average actively managed funds charge more than 100 basis points (1 basis point = .01%).
Unfortunately, Vanguard doesn’t have a workaround for its $1,000 account minimum like Charles Schwab. It also has a $20 annual account maintenance fee, but that can be avoided by signing up for e-delivery service (which just means you receive notices and statements through email instead of paper delivery).
Vanguard also charges the highest trading fees of our top picks — $7 each for your first 25 trades, and $20 apiece after that. The reason? Vanguard would prefer that you invest in its own mutual funds and ETFs, which come without trading fees. It has a lot of good options in that department, but active traders will do better with a company that charges flat trade fees across the board. E-Trade and Ally even lower their fees the more you trade (instead of penalizing you).
That’s why we recommend Vanguard for people who want to be more hands-off with their IRAs. And with their low expense ratios, Vanguard’s Target Retirement Funds offer a great deal on portfolios with a professional touch.
TD Ameritrade is the place to turn for a quick and easy rollover from 401 (k) to IRA. It only takes about 15 minutes to get the ball rolling, and if you get stuck, the company has reps that will walk you through the rollover process end to end (including assisting you with paperwork). When we reached out, the company’s customer support was quick to respond and extremely helpful. TD Ameritrade is also incredibly transparent about its fee structure, so rollover customers won’t be left in the dark about the costs (or benefits) of changing accounts.
As a bonus, customers are eligible for free trades and cash bonuses when they roll over an existing 401 (k) into a TD Ameritrade IRA. Deposits starting at $10,000 qualify for 90 days of free trades, deposits of $25,000 get 90 days free plus $100 cash, and so on — up to $2,500 cash for deposits of $1 million. Those deposit requirements are pretty high, but they’ll benefit earners rolling over a long-standing 401 (k) late in their careers.
TD Ameritrade keeps up with our top picks in the low-fee race. It requires $0 down to open an IRA, and doesn’t charge any monthly or yearly account maintenance fees. Like E-Trade, it charges $6.95 per online trade — and that price drops to $4.95 if you make more than 30 trades per quarter. (Granted, that’s not common for most IRA accounts, but it’s a possible upside.) TD Ameritrade also matches E-Trade’s automated investment option, at $5,000 down and a 0.30% management fee. However, TD Ameritrade only offers five portfolio options at its first tier, whereas E-Trade and Schwab will build you a customized portfolio for the same cost.
All things considered, we prefer E-Trade, Schwab, and Vanguard for customers opening up new IRAs. They offer slightly better resources for newcomers and more comprehensive platforms for traders. But if you just want to move funds easily from a 401 (k) to IRA, TD Ameritrade is your best bet.
You may have heard of Ally, which has made a name for itself in online banking these past few years. You may also have heard of TradeKing; a highly-rated investment platform that moved over to Ally in 2016. The new ‘Ally Invest’ incorporates Trade King’s investment tools and Ally’s famously low-cost accounts, which makes for an excellent IRA provider.
We’ll note right off the bat that Ally made the bottom of the list because it isn’t as specialized as our other top picks. It has solid resources for beginners, but isn’t quite as growth-oriented as E-Trade. And it’s not as equipped for high-volume traders as Charles Schwab — though Ally investors who make more than 30 trades in three months or maintain a $100,000 account balance are eligible for $3.95 trades, which beats even Schwab for affordability.
That said, Ally is a leader in the industry; we’re constantly impressed by its financial offerings. As one of the first institutions to prove that online banking equals low fees, Ally is part of the reason that our other top picks offer such affordable investments. Its $0 minimums and account fees (which aren’t exclusive to IRAs, but apply to most of its banking services) have pushed traditional banks like Charles Schwab to lower their own costs. It’s also been a key player in the “brokerage fee war,” pushing Schwab, Fidelity, and other institutions towards sub-$5 trading fees.
On top of being a mover-and-shaker, Ally has great customer support tools. Its phone lines and online chat are available 24/7, and our testers are always pleased with the quality and speed of Ally’s service. Getting questions answered over its live chat generally only takes about three minutes. We also love Ally’s online knowledge base; its Wallet Wise courses walk through the basics of banking and investing, and the Do It Right online community is chock-full of articles that discuss more nuanced financial planning questions.
While our other top picks have IRA-specific perks, we recommend Ally for its full range of financial products. Our suggestion? Look into Ally if you want to keep all your financial activity under one roof. It has the resources to provide an excellent all-around banking and investing experience.
What to know before opening an IRA account
401 (k) first, IRA second
If you have access to a 401 (k) plan through your employer, consider making that your first course of action. Employers will generally match a percentage of 401 (k) contributions, so you can invest up to twice as much as you might on your own.
Before tackling the question of which IRA account, investors should first ask whether they have a 401 (k) plan through their employer. Those that do should generally consider contributing up to the match percentage; the match is free money. If they maximize the 401 (k) match, then opening the IRA next makes more sense.
If you don’t have access to a 401 (k) — or you’ve reached contribution limits — then an IRA is the right choice. Tax benefits make IRAs more lucrative than other investments, and they’re fairly easy to open. It generally only takes about 15 minutes to get started.
The right type of IRA for you generally depends on your employment status.
There are 11 (!) different types of IRAs out there, but like we said: Most people only need to worry about traditional and Roth (or rolling over into one of those two types). The choice between those two usually hinges on where you are in your career. If you have decades to let your savings grow, a Roth IRA is most likely the best choice. If you’ll be using your retirement funds sooner rather than later, consider a traditional IRA.
|Traditional IRA||Roth IRA|
|How much can you contribute?||$5,500 annually, or $6,500 if you’re over 50 years of age.||$5,500 annually, or $6,500 if you’re over 50 years of age.|
|What’s the penalty for early withdrawal?||A 10% penalty is taken off the top for early withdrawal, plus you’ll pay income tax on the money taken out.||None for contributions. A 10% penalty is taken off the top for early withdrawal of earnings, plus you’ll pay income tax on the money taken out.|
|Who can contribute?||Anyone younger than 70 ½ years of age.||In 2018, single filers must make less than $135,000 annually. Couples filing jointly must make less than $199,000 in combined income.|
|When do you pay taxes?||When you withdraw money in retirement. Until then, you’re allowed to deduct your contributions each year.||Contributions aren’t deductible, but you won’t pay any money on the taxes you withdraw in retirement.|
|When do you have to take money out?||You must take out Required Minimum Distributions (RMDs) starting at age 70 ½ — whether you need the money or not.||You don’t! You can keep saving until you’re ready to tap in.|
|Who is it best for?||People with higher income who will benefit from paying less in taxes each year, and will likely be in a lower tax bracket after retiring than they are at the time of enrollment.||Young people who have a longer time horizon to let their retirement savings grow. Over time, accumulated returns will outweigh taxes paid on the front end.|
Some people will need to look outside the Roth / traditional framework. If you have special employment circumstances (if you’re self-employed or work at a non-profit, for example), you may be eligible for one of these IRA alternatives:
- SEP IRA: The Simplified Employee Pension (SEP) plan is a traditional IRA that follows all the same rules for investment, distribution, and rollover. The big difference is that it’s set up by your employer, usually in place of a pension fund. It’s meant to be an easy way for your employer to contribute to your retirement.
- SIMPLE IRA: The Savings Incentive Match Plan for Employees (SIMPLE) IRA is also set up by employers to contribute to their employees’ Traditional IRAs. It works like a 401(k) and is meant as a start-up retirement savings plan for small businesses.
- Solo 401 (k): Also known as the “one-participant” 401(k), the Solo 401(k) is a traditional 401(k) plan that covers a business owner with no employees, or that person and his or her spouse. These plans have the same rules and requirements as other 401(k) plans, and they also closely resemble SEP IRAs.
- 403 (b): If you work as an educator or in a hospital or nonprofit, you might be eligible to contribute to a 403(b) plan, which closely resembles a 401(k) plan, but is designed specifically for employees in the public sector.
In a few situations, money can be withdrawn early without penalties.
With both Roth and traditional IRAs, the account holder can begin taking “qualified distributions” (read: penalty-free) at age 59 ½. Any earlier, and withdrawals will be subject to income tax and a 10% early withdrawal penalty. There are, however, a few special cases where early withdrawals are exempt from penalties:
- First-time home buyers can withdraw up to $10,000 penalty- and tax-free to finance their purchase. This exception applies to both Roth and traditional IRAs, with one catch: You have to have held the account for at least five years prior to purchasing your home.
- Students and parents can take money out to cover qualified education expenses; these generally include tuition, books, supplies, equipment, and room & board. Money taken out for education will taxed, but is exempt from the 10% early withdrawal penalty.
- In case of emergencies like disability, death, or pressing medical needs of the account holder, money may be able to be taken out tax- and penalty free.