One key aspect of getting the most out of your nest egg is in tax planning. A 401k or IRA are both great options that allow you to deposit pre-tax money, but you’ll owe taxes on that money when you begin to make withdrawals in retirement. But there’s another option: the Roth IRA. What is a Roth IRA? A Roth IRA is an individual retirement account funded with money you’ve already paid taxes on, so you can make tax-free withdrawals in retirement. That means your investments can grow tax-free, meaning all the money you see in your account really is yours.
Before you open a Roth IRA, it’s important to look at the various discount brokers to ensure you’re not only avoiding costs but getting the advice and education you need. Because at the end of the day, the best retirement account is going to be the one that helps you understand how to maximize the value you’re getting from it.
Fortunately, GOBankingRates’ Best Brokers ranking has done the research for you by comparing fees, commissions, promotions and research and education tools of the many discount brokers to determine which ones are the best place to open a Roth IRA.
Here’s a closer look at the top five best brokers for a Roth IRA:
- TD Ameritrade
- Merrill Edge
- Charles Schwab
- Ally Invest
Best Roth IRA Providers
These five companies topped the GOBankingRates Best Brokers ranking:
|The Best Roth IRA Account Providers|
|Broker||Cost to Trade||Minimum||Fees||Promotional or Introductory Offers|
|TD Ameritrade||$6.95||$0||$0 service fees; $44.99 broker-assisted trade fee||Trade commission-free for 60 days; Get up to $600 cash when you open a new account|
|Merrill Edge||$6.95||$0||$0 service fees; Commission waived for 30 monthly online trades for Platinum tier clients; 100 for Platinum Honors tier||Get up to $600 for opening a new account|
|Charles Schwab||$4.95||$1,000||Minimum deposit is waived if you establish an incoming monthly transfer of at least $100||N/A|
|E-Trade||$6.95||$0||Early withdrawals taken before age 59½: $25; Excess contribution removal: $25; Recharacterizations: $25||Get up to $600 plus 60 days of commission-free trades for deposits of $10k or more|
|Ally Invest||$4.95||$0||$0 monthly maintenance fees and low commission fees; IRA Online Savings and IRA CDs available for both Traditional and Roth IRAs||Up to $3,500 cash bonus and commission-free trades for new accounts; Post-promotion equity trades as low as $3.95; Intuitive LIVE trading platform and research tools; Credit other firms’ transfer fees up to $150|
|Information accurate as of Aug. 24, 2018.|
The $6.95 commission on trades at TD Ameritrade isn’t the lowest-cost option, but that will be a much smaller factor for passive retirement investors who don’t actively trade. Meanwhile, the lack of an account minimum could make TD Ameritrade one of the best Roth IRA brokers for beginners. TD Ameritrade’s robust trading platform and tools are an appealing perk for beginners and anyone looking to expand their investment knowledge.
Where TD Ameritrade Shines
- No minimum to open an account
- Promotional offer of up to $600 and two free months of trading for new accounts
- Strong customer service and research/educational tools
Where TD Ameritrade Falls Short
- $6.95 trading commission
- $44.99 commissions for broker-assisted trades
Read This: The Best Robo-Advisors for Your Money
If you already bank with Bank of America and have a large enough account, the free trading at Merrill Edge offered as part of the Platinum tiers is an appealing offer, but if you bank elsewhere and don’t expect to change, you could miss out on this option even as your account grows in size. In that case, the $6.95 trading fee is higher than that of lower-cost brokers. However, for those interested in getting assistance in managing their portfolio, services provided through Merrill Lynch could be for you.
Where Merrill Edge Shines
- No account minimums or service fees
- Up to 100 free trades a month for members of Platinum Honors Tier
- $29.95 representative-assisted trades
Where Merrill Edge Falls Short
- $6.95 per-trade commissions
- Must bank with Bank of America to access Platinum tiers
Related: The Best 401k Companies
The $4.95 per trade commissions has become something of an industry gold standard for trading stocks and ETFs, and Schwab is among the Roth IRA providers on the lower end of the cost scale. However, the $1,000 minimum might mean Schwab isn’t among the best Roth IRA brokers for beginners unless you’re sure you want to schedule regular monthly transfers to your account, in which case the minumum deposit is waived.
Where Charles Schwab Shines
- $4.95 per trade commission
- Minimum deposit waived for accounts with scheduled monthly transfers
- Broad access to customer service and research/educational tools
Where Charles Schwab Falls Short
- $1,000 minimum to open an account
- No promotional offers for new accounts
Click to see the best features to look for when choosing a broker.
If you do need to make an early withdrawal, E-Trade will hit you with a $25 penalty. And while the $6.95 per trade commission isn’t the lowest available, there’s no minimum to open an account, making it a great option for investors who want to start small. Additionally, E-Trade offers plenty of tools to help you learn more about investing and research your potential trades.
Where E-Trade Shines
- No minimum to open an account
- Up to $600 in bonus cash in addition to 60 days of free trading for new accounts
- Robust research and educational tools
Where E-Trade Falls Short
- $6.95 per trade commission
- Additional fees for early withdrawals, excess contribution removal or recharacterizations
If you’re an active trader with at least $100,000 in your account, the option to trade at $3.95 a share could make Ally Invest the ideal pick for your Roth IRA. And, even if you’re not, the $4.95 per trade fee is in line with the lowest-cost brokers in the industry, making it among your best options.
Where Ally Invest Shines
- $4.95 per trade commission
- Up to $3,500 in bonus cash for new accounts
- $3.95 per trade commission for Select members
Where Ally Invest Falls Short
- Select membership only available to active traders with large account balances
More on Investing
- How to Invest Money Wisely
- What Is a Broker?
- The 10 Best Short-Term Investments
- Money Experts Share the Best Way to Invest $1,000
Methodology: To determine its Best Roth IRAs category ranking, GOBankingRates examined the top brokerages, excluding non-active institutions.
Criteria for ranking: GOBankingRates scored the brokerages from most to least favorable on the following factors: (1) cost to trade, (2) number of investment options, (3) opening investment requirement, (4) promotional or introductory offers, (5) fees and (6) customer experience, which includes: mobile and online access, 24/7 customer service with a live person, live chat, access to research and educational tools. Brokerages were then ranked according to their total score.
Data for Best Brokers was compiled from and verified against the individual institutions’ websites between June 13 and Aug. 1, 2018. Costs, terms and conditions are subject to change at the discretion of the individual financial institutions. Some information might reflect short-term or promotional offers only, and it is possible additional terms and conditions must be met in order to obtain the terms listed. Availability might vary by region, minimum investment amounts and other factors. Please verify terms and conditions before opening an account.
GOBankingRates is a personal finance and consumer interest rate website owned by ConsumerTrack, Inc., an online marketing company serving top-tier banks, credit unions, and other financial services organizations. Some brokerages mentioned in the Best Brokers rankings are clients of ConsumerTrack, Inc., which serves more than 100 national, local and online financial institutions. Rankings are completely objective, and no institution, client or otherwise, paid for inclusion or specific placement.