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Best Roth IRA Accounts Of July 2023

BusinessBest Roth IRA Accounts Of July 2023

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When researching the best way to save for your nonworking years, you likely have come across individual retirement accounts, also known as IRAs. One of the most popular types of IRAs is a Roth IRA.

A Roth IRA works much the same as a traditional IRA — you can regularly contribute to the account and watch your investments grow year over year so you have a nest egg to tap into later on — but there are some key differences that make a Roth IRA stand out, including limits on who can contribute and the ability to withdraw your earnings in retirement tax-free (see our FAQs for more details).

To determine which Roth IRAs are the best overall, CNBC Select reviewed and compared over 20 different accounts offered by national banks, investment firms, online brokers and robo-advisors. Our top Roth IRA selections require no (or low) minimum deposits, offer commission-free trading of stocks and ETFs, provide a variety of investment options and have educational resources or tools that account holders can access. Our recommendations are catered to beginner investors who are likely just starting out in their careers since Roth IRAs are the most effective retirement savings vehicles if you’re in a lower tax bracket. (See our methodology for more information on how we chose the best Roth IRAs.)

Best Roth IRAs

Best overall

Charles Schwab

  • Minimum deposit and balance

    Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No account minimum for active investing through Schwab One® Brokerage Account. Automated investing through Schwab Intelligent Portfolios® requires a $5,000 minimum deposit

  • Fees

    Fees may vary depending on the investment vehicle selected. Schwab One® Brokerage Account has no account fees, $0 commission fees for stock and ETF trades, $0 transaction fees for over 4,000 mutual funds and a $0.65 fee per options contract

  • Bonus

  • Investment vehicles

    Robo-advisor: Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium™ IRA: Charles Schwab Traditional, Roth, Rollover, Inherited and Custodial IRAs; plus, a Personal Choice Retirement Account® (PCRA) Brokerage and trading: Schwab One® Brokerage Account, Brokerage Account + Specialized Platforms and Support for Trading, Schwab Global Account™ and Schwab Organization Account

  • Investment options

    Stocks, bonds, mutual funds, CDs and ETFs

  • Educational resources

    Extensive retirement planning tools

Pros

  • $0 minimum deposit for active investing
  • No commission fees for stock and ETF trades and no transaction fees for over 4,000 mutual funds
  • Offers extensive retirement planning tools
  • Users can get on-demand advice from a professional advisor/Schwab expert
  • Robo-advisor Schwab Intelligent Portfolios® available as a no-fee automated service option (with Premium version available for a fee)
  • Trading platform StreetSmart Edge® available for more active investors
  • 24/7 customer support access by phone or chat
  • Charles Schwab offers over 300 brick-and-mortar branches across the U.S. for in-person support

Cons

  • Specific transactions may require commission fee
  • Robo-advisor Schwab Intelligent Portfolios Premium charges a one-time planning fee of $300, then a $30 per month advisory fee. For that price, you get unlimited 1:1 guidance from a CFP, interactive planning tools, plus a personalized roadmap for reaching your goals

With a Roth IRA at Charles Schwab, you can make after-tax contributions, buy and sell stocks, mutual funds, ETFs and avoid paying taxes on qualified withdrawals. There are no monthly service fees and no account minimums. To open a Roth IRA at Charles Schwab, you’ll need your Social Security number, your employer’s name and address, if applicable, and any date of birth for inheritance recipients.

For retirees-to-be, Schwab offers all the tools and resources to ease the transition, such as planning calculators and market insights from experts.

Best for beginner investors eager to learn

Fidelity Investments

  • Minimum deposit and balance

    Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No minimum to open a Fidelity Go account, but minimum $10 balance for robo-advisor to start investing.

  • Fees

    Fees may vary depending on the investment vehicle selected. Zero commission fees for stock, ETF, options trades and some mutual funds; zero transaction fees for over 3,400 mutual funds; $0.65 per options contract. Fidelity Go has no advisory fees for balances under $25,000 (0.35% for balances over $25,000 and this includes access to unlimited 1-on-1 coaching calls from a Fidelity advisor).

  • Bonus

  • Investment vehicles

    Robo-advisor: Fidelity Go®

  • Traditional, Roth and Rollover IRAs Brokerage and trading: Fidelity Investments Trading Other: Fidelity Investments 529 College Savings; Fidelity HSA®

  • Investment options

    Stocks, bonds, ETFs, mutual funds, CDs, options and fractional shares

  • Educational resources

    Extensive tools and industry-leading, in-depth research from 20-plus independent providers

Pros

  • No commission fees for stock, ETF, options trades
  • No transaction fees for over 3,400 mutual funds
  • Robo-advisor Fidelity Go (free for balances under $10,000)
  • Hybrid robo service Fidelity Personalized Planning & Advice
  • Limited-time $100 offer
  • Abundant educational tools and resources
  • 24/7 customer service
  • Over 100 brick-and-mortar branches across the U.S. for face-to-face support

Cons

  • Fidelity Go fee is $3 per month for balances between $10,000 and $49,999; 0.35% for balances over $50,000
  • Fidelity Personalized Planning & Advice requires $25,000 minimum balance and has a 0.50% advisory fee
  • Some of Fidelity’s mutual funds require reaching specific thresholds
  • Reports of platform outages during heavy trading days

When opening a Roth IRA at Fidelity Investments, you can choose whether to have Fidelity pick and manage your investments (the Fidelity Go® Roth IRA option) or to do it yourself. Either way, there’s no minimum required to open your account. Newbie investors ready to dive in can rely on Fidelity’s robust planning tools, support from Fidelity representatives, helpful explainer articles, personalized quizzes and even free educational webinars and events.

Best for hands-on beginner investors

Ally Invest®

  • Minimum deposit and balance

    Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No account minimum for Self-Directed Trading. $100 minimum for Robo Portfolios

  • Fees

    Fees may vary depending on the investment vehicle selected. Self-Directed Trading has zero commission fees for stock, ETF, options trades; $0.50 per options contract. Robo Portfolios have zero management fees

  • Bonus

    You may be eligible for up to $3,000 bonus cash when you open an Ally Invest Self-Directed account

  • Investment vehicles

  • Investment options

    Stocks, bonds, ETFs, options, mutual funds, margin account and forex trading

  • Educational resources

    Offers informational articles to help users improve their understanding of investment strategies and market trends

Cons

  • Robo Portfolios require a $100 minimum deposit
  • Mutual funds may require transaction fee

The Ally Invest Roth IRA allows beginner investors to dip their toes into the market in a DIY way through its Self-Directed Trading option. There’s no account minimum to get started, plus no monthly maintenance fees or commission fees on stocks, ETFs or options. Ally offers plenty of articles on investing, as well as general banking and inspirational personal finance stories from real people.

Best for hands-off beginner investors

Wealthfront

  • Minimum deposit and balance

    Minimum deposit and balance requirements may vary depending on the investment vehicle selected. $500 minimum deposit for investment accounts

  • Fees

    Fees may vary depending on the investment vehicle selected. Zero account, transfer, trading or commission fees (fund ratios may apply). Wealthfront annual management advisory fee is 0.25% of your account balance

  • Bonus

    Get $50 bonus when you fund your first taxable investment account

  • Investment vehicles

  • Investment options

    Stocks, bonds, ETFs and cash. Additional asset classes to your portfolio include real estate, natural resources and dividend stocks

  • Educational resources

    Offers free financial advice for college planning, retirement and homebuying

Pros

  • No trade or transfer fees
  • Good for automated investing
  • Picks investments based on user’s risk tolerance and time until retirement
  • Offers a cash management checking account with a debit card
  • Tax-loss harvesting to reduce the taxes you pay: 
  • Fund your first taxable Investment Account and get a $50 bonus.

Cons

  • $500 minimum deposit
  • 0.25% management fee

Wealthfront is a popular robo-advisor that offers the option to invest for retirement in a Roth IRA through automated index investing — meaning Wealthfront will build and manage your retirement portfolio for you so you can be totally hands-off.

To do so, Wealthfront will ask questions about your financial goals, your investment preferences and questions to calculate your risk level before showing you a personalized portfolio. You have the ability to make adjustments as you’d like and can choose to have exposure to new opportunities like tech and clean energy. As time goes on, Wealthfront software will automatically rebalance your investments for you.

Best for access to a financial advisor

Betterment

  • Minimum deposit and balance

    Minimum deposit and balance requirements may vary depending on the investment vehicle selected. For example, Betterment doesn’t require clients to maintain a minimum investment account balance, but there is a ACH deposit minimum of $10. Premium Investing requires a $100,000 minimum balance.

  • Fees

    Fees may vary depending on the investment vehicle selected. For Betterment Digital Investing, 0.25% of your fund balance as an annual account fee; Premium Investing has a 0.40% annual fee

  • Bonus

    Up to $5,000 managed free for a year with a qualifying deposit within 45 days of signup. Valid only for new individual investment accounts with Betterment LLC

  • Investment vehicles

  • Investment options

    Stocks, bonds, ETFs and cash

  • Educational resources

    Betterment offers retirement and other education materials

See our methodology, terms apply. Does not apply to crypto asset portfolios.

Pros

  • No trade or transfer fees
  • Good for automated investing
  • Customizes users’ portfolios around their financial goals, timeline and risk tolerance
  • Users can assign specific investing goals (short- and long-term) to each portfolio and invest using different strategies (less and more risk)
  • Quick and easy to set up account
  • Able to sync external retirement accounts to your Betterment retirement goal so all your accounts are in one place. Premium plan users get unlimited access to a financial advisor (otherwise, one-time advisor consultations cost a fee ranging from $299 to $399)
  • Advanced features include automatic rebalancing, tax-saving strategies and socially responsible investing

Cons

  • 0.25% annual account fee
  • 0.40% annual account fee for upgraded premium plan
  • Premium plan requires $100,000 minimum balance

Betterment is another popular robo-advisor that offers a Roth IRA with multiple investment options, such as “Innovative Technology” and “Climate Impact.” Plus, users can get guidance from Betterment’s financial experts for a fee.

Betterment creates a retirement plan for you by estimating your future income needs and it has tools to help you figure out just how much more money you need to save. Users can set up recurring deposits into their retirement account and Betterment’s technology makes sure they don’t contribute beyond the annual Roth IRA limits.

Betterment will rebalance your portfolio automatically, notify you of any external accounts you may want to roll over, recommend deposit amounts to stay on track and provide automated tax-saving tools.

Differences between a Roth IRA and a traditional IRA

With both a traditional and Roth IRA, you make consistent contributions, invest those contributions in the market and watch your money grow over time.

But Roth IRAs have a few components that make them stand out from your traditional IRA. Here’s what makes them unique:

  • When you withdraw your contributions from a Roth IRA in retirement, those withdrawals are generally tax-free (as long as your account has been open for at least five years) and they don’t count as income. Withdrawals in retirement from a traditional IRA and 401(k) will be taxed as income.
  • Contributions into a Roth IRA use after-tax dollars, unlike contributions to a traditional IRA or 401(k), which are not taxed. This may be a bigger hit to your finances in the short term, but your money will grow tax-free.
  • If you withdraw earnings you’ve made on investments in a Roth IRA before age 59 and a half, you’ll incur a 10% early withdrawal penalty and may be subject to income tax.
  • There are exceptions to the early withdrawal penalty on Roth IRAs, including taking out funds for first-time home purchases, college expenses and birth or adoption expenses.
  • Your tax filing status and income level determine whether or not you can contribute to a Roth IRA. Your contribution can be reduced as your modified adjusted gross income (MAGI) approaches the higher end of the phase-out ranges. In 2023, if married filing jointly, the phase-out range is $218,000 to $228,000; if single, the phase-out range is $138,000 to $153,000; if married filing separately and you lived with your spouse, the phase-out range is $0 to $10,000.
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Roth IRA taxes vs. traditional IRA taxes

With a Roth IRA, you pay taxes on your contributions upfront so you don’t have to pay them later when you withdraw money from your retirement fund (as long as your account has been open for at least five years).

This is the biggest difference from a traditional IRA, which lets you delay paying taxes until you withdraw funds later down the road. With traditional IRAs, your contributions are also tax-deductible, up to certain limits, so your contribution reduces the amount you owe in taxes each year.

A good rule of thumb when choosing between the two types of IRA accounts is to consider your tax bracket:

  • Choose a Roth IRA if you expect that you’ll be making more money in your later years — and thus in a higher tax bracket. It makes more sense to pay taxes today to take advantage of your current low tax rate before it goes up. Plus, since your withdrawals from Roth IRAs don’t count as income and aren’t taxed after 59 and a half, you can count on every dollar in your account when making withdrawals.
  • Choose a traditional IRA if you expect that you’ll be making less money in your later years — and thus in a lower tax bracket. In this case, it makes more sense to reduce your taxable income in the present, so in theory, you’ll pay less in taxes both now and in the future when your tax rate is lower.

Use a Roth vs. Traditional IRA Calculator to help you decide between a Roth IRA or a traditional IRA.

Roth IRA withdrawals vs. traditional IRA withdrawals

FAQs

What is the best time to invest in a Roth IRA?

The best time to invest period is as early as possible so your money has time to grow. When it comes to a Roth IRA, however, consider your current tax bracket now compared to what it will likely be later on. If you’re in a lower tax bracket today (usually the case for young investors), take advantage of a Roth IRA where you’ll pay taxes upfront on your contributions and later your withdrawals will be tax-free.

Does it matter where I open a Roth IRA?

It matters where you open a Roth IRA because not all investment options are the same everywhere you go. You can find Roth IRAs at both banks and online brokers.

Should I open a Roth IRA at a bank or brokerage?

When deciding whether to open a Roth IRA at a bank or brokerage, consider what each offers. Although both banks and online brokers have Roth IRAs, you’re likely to find more investment options through a broker and thus likely the opportunity to earn higher returns. The possibility of higher returns usually means taking on more risk, but you can do that with your retirement account when you’re young since you aren’t needing it any time soon.

What type of Roth IRA should I invest in?

The type of Roth IRA you should invest in is one that offers low fees and/or commissions, a variety of investment options to choose from, as well as tools to help you plan your retirement. The top picks on this list do just that.

What should I put my Roth IRA into?

How much should I put in my Roth IRA per month?

Is it smart to put money in a Roth IRA?

It’s smart to put your money in a Roth IRA if you have a long time horizon until retirement or if you’re in a lower tax bracket today than you plan to be in retirement.

How does my money grow in a Roth IRA?

Your money grows in a Roth IRA by your contributions into the account and by the power of compound interest, which essentially pays interest on top of interest. Even when you aren’t making contributions, the investments in your Roth IRA earn dividends or interest that get added to your balance. That interest earns more interest and so on.

How can I grow my Roth IRA faster?

You can grow your Roth IRA faster by maximizing your contributions each year. To make sure your Roth IRA grows in general (not necessarily faster), diversify your Roth IRA investments and pick investments in growth stocks. These come with higher risk yet have the potential to give you a higher return over a long period of time.

What are the cons of a Roth IRA?

The cons of a Roth IRA include income limits of who can contribute (though there’s a workaround), not ideal if you’re in a lower tax bracket come retirement, delayed tax break, low annual contribution limit and contributions are not tax-deductible.

Who should not open a Roth IRA?

Should I put more money in 401(k) or Roth IRA?

When deciding whether to put more money in your 401(k) or a Roth IRA, consider first if your employer offers a 401(k) match. If so, we’d recommend first contributing enough to your 401(k) to meet that match, which is essentially free money, and then putting extra funds into a Roth IRA to diversify your retirement savings. Keep in mind that financial experts generally recommend saving 10% to 15% of your income for retirement (and this includes any 401(k) employer match).

Bottom line

Everyone has to find a way to save for their retirement years, and a Roth IRA offers an easy way to do so, especially for younger folks who are in a lower tax bracket today than they will be later on and who have a long time until they reach those “Golden Years.”

Our methodology

To determine which Roth IRAs are the best for those looking to save for retirement, CNBC Select analyzed and compared Roth IRAs offered by national banks, investment firms, online brokers and robo-advisors. We narrowed down our ranking by only considering those that offer commission-free trading of stocks and ETFs, as well as a variety of investment options so you can best maximize your retirement savings.

We also compared each Roth IRA on the following features:

  • $0 minimum deposit: Most of the Roth IRAs on our ranking don’t have minimum deposit requirements.
  • Low fees: We considered each Roth IRA’s fees, commission trading fees and transaction fees.
  • Bonus offered: Some Roth IRAs offer promotions for new account users.
  • Variety of investment options: The more diversified your portfolio, the better. We made sure our top picks offer investments in stocks, bonds, mutual finds, CDs and ETFs. Most also offer options trading.
  • A hub of educational resources: We opted for Roth IRAs with an online resource hub or advice center to help you educate yourself about retirement accounts and investing.
  • Ease-of-use: Whether accessing your Roth IRA via your laptop at home or on your smartphone while on the go, it’s important to have an easy user experience. We noted when an investment platform excelled in usability.
  • Customer support: Every Roth IRA on our list provides customer service available via telephone, email or secure online messaging.

After reviewing the above features, we sorted our recommendations by their appeal to beginner investors who are likely just starting out in their careers since Roth IRAs are the most effective retirement savings vehicles if you’re in a lower tax bracket today than you’ll be in retirement. For the purposes of this ranking, we focused only on Roth IRAs, though the best providers often overlap with those that offer the top traditional IRAs — read our list of the best traditional IRAs here.

Your earnings on contributions to a Roth IRA depend on any associated fees, the contributions you make to your account and the fluctuations of the market.

Catch up on CNBC Select’s in-depth coverage of credit cardsbanking and money, and follow us on TikTokFacebookInstagram and Twitter to stay up to date.

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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.



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