Best Roth IRA Accounts 2023: Top 7 Picks & Reviews
Reviewed by Kristina Knight, Journalist , BA
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Retirement savings are some of the most important investments you can make, but they’re commonly neglected in favor of more immediate concerns. The U.S. Census Bureau records that 50% of women and 47% of men ages 55 to 66 have no retirement savings.
Saving up as early as now is the best way to ensure a comfortable and secure retirement. Fortunately, you have a variety of options at your disposal to do just that. One of these is to open an Individual Retirement Account (IRA). This account allows you to save for retirement and take advantage of tax savings.
The Roth IRA is a type of individual retirement account that has become increasingly popular in recent years. It offers many advantages, such as tax-free withdrawals, flexible contributions, and access to your money without penalties.
In this article, we’ll focus on the best Roth IRA accounts available today so you can make an informed decision when it comes time to open one yourself. We’ll cover seven top picks along with their associated benefits so you can find the right fit for your needs and financial goals. Let’s dive in!
7 Best Roth IRA Accounts 2023
- Fidelity Investments: Best Overall
- Ally Invest: Best for Beginners
- SoFi: Best Online-Only
- Betterment: Best for Human Advisors
- M1 Finance: Best for Automated Investing
- Interactive Brokers: Best Range of Investments
- Charles Schwab: Best Investment Strategies
What is a Roth IRA Account?
A Roth IRA is a special type of retirement savings account that lets you contribute money on an after-tax basis and withdraw funds after retirement tax-free. This means that you won’t have to be paying federal taxes on the money you take out of your account, regardless of how much you make.
The amount you can contribute to a Roth is limited each year, and there are also some Roth IRA income limits. But if you meet the eligibility requirements, this could be an excellent way to save for retirement.
A Roth IRA account can also be used for other things, such as saving for a child’s college tuition, setting aside money for emergencies, or investing in stocks and bonds.
Top 7 Best Roth IRA Accounts 2023
Fidelity Investments
Fidelity Investments is one of the most popular and trusted investment companies. With their Roth IRA account, you can enjoy no account minimum or account fees, free stock and ETF trades, and various investment management options to choose from. Because of these reasons and more, Fidelity is currently one of the best, well-rounded Roth IRA providers today.
- No account minimum
- Free stock and ETF trading
- Wide range of educational resources
- No futures, commodities, or crypto trading
- 0.35% per year advisory fees for Fidelity Go balances over $25,000
Fidelity Investments offers two options for Roth IRA: the Fidelity Roth IRA and Fidelity Go Roth IRA. The main difference between the two is that the latter lets the institution manage your investments for you based on your goals and risk tolerance.
Both accounts have no account minimum and earn no commissions on stocks, ETFs, new bonds, and Fidelity funds. These make the accounts accessible for investors of all sizes. Additionally, Fidelity offers a user-friendly platform and mobile app that allows retirement savers to manage their accounts easily and efficiently.
Lastly, Fidelity provides robust educational resources and tools to help investors make informed investment decisions. These resources include market research, investment insights, retirement planning tools, and more.
Ally Invest
Ally Invest is another great option for those looking to open a Roth IRA account due to the low costs needed to maintain it. This online-only bank offers several benefits, such as no minimum balance requirement, almost zero fees, access to over 500 commission-free ETFs from Vanguard and BlackRock iShares, and free cash-focused Robo Portfolios.
- Zero account minimum
- No commissions
- No advisory fees for Robo Portfolios
- 30% of Robo Portfolio has to be held in cash to be free
- No fractional shares
An account with Ally Invest requires almost no fees. There is no account minimum plus no monthly account management fee. They charge almost no commissions, including $0 on stocks, ETF, and no-load mutual funds. What’s great is that Ally also offers Robo Portfolios with no advisory fee, a rare feature not found in other institutions on this list.
The user interface is also very intuitive and easy to use, even for beginners. They offer a wide range of educational materials such as webinars, blogs, videos, and more to help you make informed decisions when it comes to investing your money.
Ally Invest has exceptional customer support, with 24/7 phone, email, and chat support available. The company also provides access to an assigned financial advisor who can help you with your account and investment decisions.
SoFi
SoFi is an online-only financial services company that offers both traditional and Roth IRA accounts. The SoFi Roth IRA has no account minimum, so you can open one regardless of your investment size. It also charges no commissions for stocks, ETFs, and mutual funds, and provides access to ETFs from Vanguard and BlackRock iShares.
- Zero fees and commissions
- No minimum balance and deposit
- Both active and automated trading available
- $75 migration fee
- 0.05% ETF expense ratio
- No tax loss harvesting
SoFi’s user interface is modern and intuitive, making it easy for new investors to navigate the platform. They also provide an impressive suite of financial planning tools, such as retirement calculators, investing insights, budgeting advice, etc., which can help you make informed decisions about your investments.
In addition, SoFi has been offering automated investing since 2017. This is a great option for investors who want to get started with their Roth IRA but don’t have the time or knowledge to actively manage it.
Betterment
Betterment is a robo-advisor that offers one of the best Roth IRA accounts with no account minimum and low fees. It also does most of the heavy lifting as it offers automatic features like rebalancing and tax-loss harvesting. This makes it ideal for investors who don’t have much capital to invest and are comfortable with someone else managing the portfolio for them.
- Low fee structure
- Automation features
- Human advisors available
- $100,000 account minimum for premium
- Confusing setup process
One of the biggest advantages of Betterment is its low fee structure. The company charges an annual fee of just 0.25% for its basic digital plan. This fee covers all investment management and trading costs, so there are no hidden fees or surprises.
Other attractive features of Betterment are its automatic rebalancing and automated tax-loss harvesting. The first involves advanced algorithms to automatically rebalance your portfolio and ensure that your investments stay in line with your target asset allocation.
Meanwhile, Betterment uses a tax-efficient investment strategy that aims to minimize your tax bill. The company uses a technique called tax-loss harvesting to offset taxable gains with losses, which can significantly reduce your tax liability.
If you want a human advisor, Betterment also offers personalized investment advice. You’ll have access to a team of certified financial planners who can help you optimize your portfolio and make informed investment decisions.
M1 Finance
M1 Finance is also a good option for those looking to invest in a Roth IRA. This platform offers an automated investing system that makes it easier and more affordable than ever before to save for retirement. It also has no account minimums and charges no commissions or fees on trades, making it one of the most cost-effective options available today.
- Zero fees for account and trading
- Over 80 pre-made portfolios
- Offers fractional shares
- No access to human advisors
- Lack of financial tools
M1 Finance specializes in portfolios tailored to your risk level and goals. You can choose from their pre-made portfolios or build your own based on your investment objectives. The platform’s user-friendly interface allows you to easily monitor and manage your investments with just a few clicks of the mouse.
Additionally, M1 Finance provides access to expert financial advice through its investment advisors. These advisors offer personalized guidance to help you make the most of your investments and reach your retirement goals faster. Furthermore, their mobile app is also a great way to stay on top of your Roth IRA account from anywhere at any time.
Interactive Brokers
Interactive Brokers is a great choice for advanced investors looking to maximize their Roth IRA investments. The broker offers zero to low commission rates, speedy trade executions, powerful research and trading tools, access to global markets, and more.
- Zero commissions on stocks and ETF (for Lite)
- Diverse investment options
- Robust research and education material
- Not beginner-friendly
- Website can be difficult to navigate
The Interactive Brokers Roth IRA has no minimum balance requirement and offers stock trades at $0 commissions. There are also no annual or inactivity fees associated with the account, so you can be sure that your earnings will remain intact over time.
Among the other options on this list, Interactive Brokers boasts of a wider range of investment options. It provides access to stocks, bonds, mutual funds (including index funds and money market funds), options, futures, currencies, and more. This makes it easy for investors to diversify their portfolios and take advantage of different market conditions.
Interactive Brokers also provides extensive educational resources such as investment analysis reports, market analysis videos, webinars on various topics related to investing, tax-saving strategies, and more. This makes it easy for investors of all levels to learn and grow as they manage their Roth IRA investments.
Charles Schwab
Charles Schwab is another popular option for investors looking for a Roth IRA account, with a long history of providing high-quality investment services. It’s known for its low-cost and commission-free trading, robust investment options, and excellent customer support, all of which make it an attractive choice for retirement savers who are starting out in the world of IRA investing.
- No minimum or account fees
- Extensive research provided
- Multiple investment strategies available
- High margin rates
- No direct crypto trading
Charles Schwab offers 24/7 customer support and a wide variety of investment options such as ETFs, stocks, mutual funds, bonds, CDs, and more. The Charles Schwab Roth IRA has no account minimums or annual fees, so you can start saving with any amount you have available.
In terms of investment strategies, you have multiple choices; you can go for self-directed or opt for an advisor. You can also choose Schwab Intelligent Portfolios, which uses AI technology to manage your investments.
Lastly, the Roth IRA account from Charles Schwab also provides access to a variety of retirement planning tools, such as an online calculator and portfolio analysis reports, so you can keep track of your progress.
How Does a Roth IRA Work?
A Roth IRA allows you to contribute after-tax dollars to the account. This means that you don’t get a tax deduction for the Roth IRA contributions you make, but any investment earnings and withdrawals are tax-free, as long as you meet certain criteria.
Here’s how it works in detail:
- You open a Roth IRA account with a brokerage firm, bank, or other financial institution.
- You contribute after-tax dollars to the account, up to a certain contribution limit set by the IRS.
- You can invest the money in various assets, like stocks, bonds, mutual funds, and exchange-traded funds (ETFs).
- The account then grows your money tax-free, and you don’t have to pay taxes on any investment earnings or capital gains when you withdraw contributions in retirement.
- Unlike a Traditional IRA, a Roth IRA does not have required minimum distributions (RMDs) during the lifetime of the original account holder, so you can leave the money in the account to continue growing tax-free for as long as you like.
How To Open a Roth IRA Account?
Here’s a general guide on how to open a Roth IRA account:
Choose a financial institution: You can open a Roth IRA account with many financial institutions such as banks, brokerage firms, mutual fund companies, and robo-advisors. Research different options and compare their fees, investment options, and other features to determine which one best suits your needs.
Check the eligibility requirements: To open a Roth IRA account, you must have earned income, and your income must fall below certain Roth IRA contribution limits set by the IRS. Check with your financial institution or tax advisor for specific details.
Fill out the application: After choosing a financial institution and confirming your eligibility, you can typically open a Roth IRA account by filling out an application online or in person. The application will ask for your personal information, as well as details about your investment preferences and risk tolerance.
Fund your account: Once your account is open, you can fund it with your initial contribution. The minimum amount required to open a Roth IRA account can vary depending on the financial institution or brokerage firm you choose to use.
Choose your investments: After your account is funded, you can choose your investments. Most financial institutions offer a wide range of investment options, including assets from the stock market.
Differences Between Roth IRA & Traditional IRA
A Traditional IRA allows you to contribute pre-tax dollars to your account, meaning you don’t pay taxes on the money you contribute until you withdraw earnings in retirement. The amount you contribute to a Traditional IRA may also be tax-deductible in the year you make the contribution, depending on your income and other factors.
In contrast, a Roth IRA allows you to contribute after-tax dollars to your account. This means you don’t get a tax deduction when you contribute, but your contributions and any investment earnings grow tax-free. When you let your Roth IRA earn, you don’t have to pay income taxes on the withdrawals.
If you foresee yourself in a higher tax bracket in retirement, a Roth IRA may be more appropriate.
Different Types of Roth IRA
In case you’re wondering, there are different types of Roth IRAs available. Each type has its own set of rules and regulations, so it’s important to understand which one is best for your situation. Here’s a quick rundown of the different retirement accounts:
Rollover IRA
A rollover IRA is an account that allows you to move money from a previous retirement plan, such as a 401(k) or 403(b), into a Roth IRA. This can be beneficial if you want to keep the same assets but take advantage of the tax-free withdrawals available with the Roth.
Self-Directed IRA
A self-directed IRA allows the account holder to directly manage their investments, instead of relying on financial advisors. This means you can invest in stocks, bonds, mutual funds, and other types of investments. For those who are comfortable managing their own investments, this type of Roth account could be an attractive option.
SIMPLE IRA
A SIMPLE IRA (Savings Incentive Match Plan for Employees) is an employer-sponsored retirement plan that allows account holders to contribute to traditional IRAs. With this type of account, employers offer matching contributions of up to 3% of your taxable income.
SEP IRA
A SEP IRA (Simplified Employee Pension) is another type of employer retirement account. It allows employers to contribute up to 25% of their employees’ salaries into a Roth IRA for them.
Inherited IRA
An inherited IRA is an account that allows you to inherit a traditional or Roth IRA from a deceased relative. You cannot make additional contributions to an inherited IRA, but you can withdraw and use the money as needed.
Spousal IRA
A spousal IRA is an account that allows married couples to contribute up to $13,000 each year. This can be especially beneficial for couples with unequal incomes, as the lower-earning partner can receive a tax deduction from his or her contribution.
How Much Do You Need to Open a Roth IRA Account?
The minimum amount required to open a Roth IRA account can vary depending on the Roth IRA provider or brokerage firm you choose to use. Some financial institutions may require as little as $50 to open a Roth IRA account, while others may require a higher minimum deposit, such as $1,000 or more.
It’s important to research the different options available and compare the fees, investment options, and other features of each provider to determine which one best suits your needs and budget.
How To Choose The Best IRA Account?
When choosing the best Roth IRA account, there are a few factors to consider.
Low Minimum Deposit Requirements
Look for an IRA Roth account that has a low minimum deposit requirement, so you don’t have to commit too much of your money right away. For example, many Roth IRA providers typically offer no minimum deposits, while others may require as little as $500.
Low Costs & Fees
The best IRA Roth savings accounts will have low to no costs and fees, so you can keep more of your money invested in the account rather than paying it out in administrative costs. Look for an IRA with no annual fees and minimal trading or transaction fees.
Low-Cost Investment Options Accessible
Ensure the IRA Roth account you choose has a wide range of low-cost investment options, such as ETFs and mutual funds. This way, you can diversify your investments while keeping costs minimal.
Account Management Options
Look for an IRA Roth account with intuitive, user-friendly account management options. You should be able to easily check your balance and make changes to your investments without any difficulty. The best ones have additional features, such as mobile apps and automated investments.
Wrapping Up
Retirement savings are investments you shouldn’t sleep on. Thankfully, the Roth IRA is one of the best options available to get you started in retirement planning.
We’ve discussed seven great providers with some of the best Roth IRAs today so you can choose what works for your needs and financial goals. We hope this article has been helpful and informative! Good luck on your journey toward a comfortable and secure retirement!
Frequently Asked Questions (FAQs)
Your qualifications will depend on your filing status, income level, and other factors. Generally speaking, you must have earned income in the year for which you’d like to contribute to a Roth IRA. Also, if your filing status is single or married and your modified adjusted gross income (MAGI) is over a certain amount for a certain tax year, then you may or may not be eligible for a Roth IRA.
A Roth IRA grows through contributions and investments. Contributions are made with after-tax money, meaning you pay taxes on the money before contributing it to your account. This means that any earnings from those contributions will be tax-free when withdrawn during retirement.
Roth IRA accounts are a great way to save for retirement as they offer income tax-free growth and withdrawals. This means that you’ll get the most out of your contributions since you won’t have to pay taxes on any earnings or gains in the account until you withdraw them at retirement age.
You can contribute up to $6,000 per year ($7,000 if you’re 50 or older) to a Roth IRA. Keep in mind that the amount you’re allowed to contribute may be reduced depending on your income and contribution limits set by the IRS.
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