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ByMaggie Overholt Senior Insurance Editor

Maggie is the former lead insurance writer and editor at Reviews.com. She's written more than 70 insurance articles covering homeowners, auto, life, motorcycle, travel, and more.

The Best IRA Accounts

Saving for your retirement years is a no-brainer, but it can take some work to find the best vehicle for doing so. The choice won’t be the same for everyone: Your resources, age, and other factors all play a role in determining the best way to target your savings dollars. We talked to financial experts and compared the top IRA account providers to find the best options for you, no matter where you are in life.

The 5 Best IRA Accounts

The Best IRA Accounts: Summed Up

E*TRADE
Charles Schwab
Vanguard
TD Ameritrade
Ally
Best for Beginners
Best for Hands-On Investing
Best for Hands-Off Investing
Best for Rollovers
Another to Consider
Minimum Balance Requirement
$0
$1,000¹
$1,000
$0
$0
Account Maintenance Fee
$0
$0
$20²
$0
$0
Online Trading Fee
$6.95
$4.95
$7-$20³
$6.95
$4.95
Standout Feature
Online resources
In-house research
Affordable management
Rollover perks
Customer service

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

Best for Beginners

E*TRADE
E-Trade
Comprehensive resources and great customer support make E-Trade ideal for first-time IRA users. It also has the tools to grow with you as you become a more active investor.
Pros
Great for beginners
Excellent tools
24/7 support
Solid account offerings
Cons
Not for high-volume investors

Why we chose it

Great for beginners

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.

Educational tools

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.”

E*TRADE’s 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.

24/7 support

Of course, some finance decisions require discussion, 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.

Solid account offerings

E*TRADE’s resources wouldn’t stand up without its account offerings. IRA customers enjoy $0 account minimums and maintenance fees, and a low $6.95 online trading fee. 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.

Points to consider

Not for high-volume investors

If you are an experienced high-volume investor looking to actively manage your IRA through stock trades, E*TRADE probably isn’t the best venue for you. You’ll find cheaper trading fees at Charles Schwab, for example. Plus, the resources on E*TRADE’s website are geared more toward educating beginners than supporting experts who are accustomed to active and frequent involvement with their accounts.

Best for Hands-On Investing

Charles Schwab
Charles Schwab
In-depth market research paired with a customizable, advanced trading platform make Schwab the best choice for experienced and involved investors.
Pros
Industry-leading research
Advanced trading platform
Affordable trading
Cons
Steep learning curve

Why we chose it

Industry-leading research

If you have experience trading and want to manage your IRA funds more actively, then we highly recommend Charles Schwab. 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.

Advanced trading platform

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.

Affordable trading

Schwab makes trading affordable, too, with $0 account minimums and 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.

Points to consider

Steep learning curve

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. 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.

Best for Hands-Off Investing

Vanguard
Vanguard
Let the experts do the investing for you, with one of Vanguard’s low-cost, professionally managed target retirement funds.
Pros
Target retirement fund
Low account fees
Cons
No workaround for initial deposit
High trading fees

Why we chose it

Target retirement fund

If you want to prepare for retirement but aren’t comfortable tackling the stock market or taking risks with your retirement savings, 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 $1,000, and the average Vanguard target retirement fund only charges 0.14% in fees — very low compared to funds from most other providers.

Low fees

Those low fees are 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. Dejan Ilijevski, MS, an MBA Investment Advisor at Sabela Capital Markets, told us, “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%).”

Points to consider

No workaround for initial deposit

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).

High trading fees

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.

Best for Rollovers

TD Ameritrade
TD Ameritrade
A simple, streamlined rollover process makes it easy to move from 401 (k) to IRA. As a bonus, rollover customers are eligible for cash perks and 90 days of free trades.
Pros
Easy rollover
Free trades and bonuses
Low fees
Cons
Not as comprehensive
No international markets

Why we chose it

Easy rollover

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.

Rollover perks

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.

Low fees

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. TD Ameritrade also matches E*TRADE’s automated investment option, at $5,000 down and a 0.3% 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.

Points to consider

Not as comprehensive

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.

No international markets

If you happen to be a hands-on investor who likes to trade on the international markets overseas, you’re out of luck with TD Ameritrade. Although the company does offer a robust array of investment products, it doesn't allow for international trading.

Another to Consider

Ally Invest
Ally
Ally IRAs are easy to open and affordable, with no minimum deposits or annual fees. Plus, we stand by Ally’s entire roster of banking services.
Pros
Industry leader
Includes Trade King’s resources
Solid support and resources
Cons
Not specialized

Why we chose it

Industry leader

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.

Includes Trade King’s resources

You may 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.

Solid support and resources

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.

Points to consider

Not specialized

Ally 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 every three months or maintain a $100,000 daily account balance are eligible for $3.95 trades, which beats even Schwab for affordability.

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.

How to choose an IRA account

Access your 401 (k) first

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.

Consider your employment status

There are 11 (!) different types of IRAs out there, but 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.

Assess any special circumstances

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.

Beware early withdrawals

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.

IRA FAQ

What is an IRA, and how does it work?

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. 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: 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).
  • Roth IRA: 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. Direct transfers are tax-free, but if the company cuts you a check to deposit yourself, it’ll be taxed: 10 percent for an IRA to IRA rollover, and 20 percent for other account types.

How do I decide what the best type of IRA is for me?

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.

What’s the best way to manage my IRA?

You may choose your own stocks, bonds, and mutual funds to invest in, or leave the investing to the pros — there are actively-managed and automatic accounts. These charge a fee (usually between 0.3% and 1%) for an advisor or algorithm to select promising investments and makes trades for you.

Our Other Financial Reviews

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