Online brokers and robo-advisors let you open a variety of accounts, but for people taking advantage of the tax benefits of an Individual Retirement Account (IRA), a few other features come in handy.
The best IRA accounts are either traditional stock brokers or robo-advisors that have excellent retirement planning tools and reporting. We looked for help determining how much to save for retirement as well as clear reports. We also made sure these brokers/advisors do not apply an annual fee for managing your IRA, so you can keep that money growing for your retirement.
Best IRA Accounts for October 2020:
- Fidelity Investments
- Charles Schwab
- Merrill Edge
- M1 Finance
- Account Minimum: $0
- Fees: $0 for stock/ETF trades, $0 plus $0.65/contract for options trade
Fidelity is improving its retirement planning tools intended to engage millennials with a game called Five Money Musts, which encourages new investors to get into the markets using exchange-traded funds. For those who are further down the road toward retirement, there are tools to help get organized as one’s retirement date approaches, including a clear explanation of how and when to take Social Security payments. Fidelity offers everything from managed accounts to self-service, and its robo-advisory, Fidelity Go, can be used for IRAs.
Rolling an employer’s 401(k) balance into an IRA is a process that can be cumbersome and full of twisty passages, but Fidelity spells out the necessary steps clearly. Its retirement calculators and goal-setting tools are written in plain English and are easy to use.
Low transaction fees, plus terrific order-routing technology that lowers the cost of a transaction by seeking out price improvement.
Abundant online help, including a chatbot that can answer most customer queries.
A wide range of assets can be traded, All ETFs trade commission-free.
The platform suffered some outages during heavy trading days, but Fidelity has been investing heavily in the infrastructure to keep the platforms steady.
Automatic dividend reinvestment is set for the entire account; to change it for a particular security, you must call customer service.
Finding a particular tool or feature can be difficult due to the platform's menu system.
- Account Minimum: $0
- Fees: Free stock, ETF trading, $0.65 per options contract
Schwab offers a wide range of assets in which to invest, and excellent options trading tools. Its Retirement and Planning section of the web platform helps customers understand the types of accounts available, including how to roll over an old 401(k) to an IRA. You can go it alone or sign on with a professional advisor to guide you on your journey.
Schwab’s robo-advisory, Intelligent Portfolios, can be used with any kind of IRA, if you’d prefer to use its no-fee automated service. As retirement nears, Schwab’s site is full of ways to generate income safely up to your target date and beyond. The Retirement Income Quiz is worth taking just to see which areas of financial freedom you might want to study further.
No-cost robo-advisory, Schwab Intelligent Portfolios, is a good place to start investing for retirement.
All ETFs can be traded without incurring transaction fees.
ETF research center also has a screener for closed-end funds, which can be used to generate income in retirement.
Certain mutual funds incur a $76 fee when purchasing.
There is no report spelling out expected income.
- Account Minimums: $0
- Fees: $0 per stock trade. Options trades $0 per leg plus $0.65 per contract
Merrill Edge’s educational offerings are based on investing experience, life stage, life events, and retirement, guiding clients with articles, videos and webinars, and online courses. Almost all of the tools available take a long-term look ahead with a huge focus on retirement planning, so having an IRA here makes a lot of sense.
Merrill’s Portfolio Story feature is a terrific tool for retirement planning and investing for goals. It’s personalized to each customer and displays your asset allocation and your progress towards your goal in an inviting layout. You can drill down for more information about a particular holding using Merrill’s Stock Story feature, which also provides details on a company’s environmental, social and governance (ESG) ratings. A hypothetical trade calculator projects how a trade could impact your entire portfolio.
Merrill has made a huge investment in its mobile apps, reflecting the number of customers who access its services using smartphones and tablets. The mobile apps also include a wealth of guidance and retirement planning content.
Merrill Edge gives you personalized portfolio analysis that includes any Bank of America accounts.
Merrill Edge’s retirement planning and life stage planning tools are top notch.
Merrill customers get access to a customizable news feed with content from more than 35 providers.
Merrill Edge’s complex options trading is limited, taking a tool away from sophisticated investors planning to use options extensively in their IRA.
Self-directed investors may get annoyed by the seemingly constant push towards hiring a financial advisor.
- Account Minimum: $500
- Fees: 0.25% for most accounts, no trading commission or fees for withdrawals, minimums, or transfers. 0.42%–0.46% for 529 plans
Wealthfront allows you to open traditional IRAs, Roth IRAs, SEP IRAs, and 401(k) rollovers along with a variety of taxable accounts. Goal planning and tracking are where Wealthfront shines. Your dashboard shows all of your assets and liabilities, giving you a quick visual check-in on the likelihood of attaining your goals. As you make life changes, such as a new job, a spouse, having or adopting a child, or buying a house, your Wealthfront plans adjust accordingly.
Wealthfront’s use of third-party data makes it incredibly useful for all sorts of planning—not just retirement—and you may find yourself running scenarios far beyond your long-term investment needs. You can even figure out how long you can take a sabbatical from work and travel, while still making your other goals work.
Wealthfont appears to be making a strong move to integrate all of its money services in a single platform with its Self-Driving Money concept, where you deposit your pay into the platform and it handles your finances for you. This service isn’t up and running yet, but it is a primary focus for the company as part of the next major launch.
Wealthfront provides terrific financial planning that helps you see the big picture.
The robo-advisor’s goal-setting assistance goes in-depth for large goals, such as home purchases and college savings.
If you have multiple goals in addition to retirement, Wealthfront’s Path tool shows you the trade-offs you’ll face prioritizing one over the other.
Wealthfront offers no online chat for customers or prospective customers.
Portfolios under $100,000 are not customizable beyond risk settings.
Larger retirement accounts with Wealthfront may contain more expensive mutual funds as an additional type of diversification.
- Account Minimum: $100 ($500 minimum for retirement accounts)
- Fee: 0%
M1 Finance offers a unique combination of automated investing with a high level of customization, allowing clients to create a portfolio tailored to their exact specifications. You can create an IRA portfolio containing low-cost ETFs or use individual stocks—or both. M1’s target customer has a long-term focus and experience with using a traditional online brokerage to invest in stocks and ETFs. M1 is offering these potential clients a lower-cost alternative that allows fractional share transactions and a good amount of control over the portfolio contents. This is the key difference between M1 and many other offerings, as you often are giving up much of the control in exchange for the portfolio management services.
With M1, you can choose one of more than 80 expert portfolios or build your own. You can also build pies—M1’s name for the circular charts showing asset mixes in a portfolio—made out of other pies and keep them all balanced to your specifications. Overall, M1 is offering a remarkably flexible platform that includes stock and ETF screeners to help with investment selection. This type of tool and the approach behind it are still rare in the robo-advisory world.
M1 doesn’t brand itself as an advisory service; rather, it is an automated investing platform designed to take care of the ongoing management of the portfolio you create. This is a do-it-yourself investing platform, and it expects you to know what you are doing, and why. As such, M1 doesn’t have many tools for setting goals beyond several dozen articles about retirement savings. This may be jarring to investors expecting more hand-holding, but intermediate investors may welcome the lack of distractions standing in the way of actual portfolio creation. Its offerings have resonated with many investors, though—in February 2020, M1 announced that it had crossed the $1 billion threshold of assets under management.
M1 allows you to trade fractional shares so you are fully invested.
M1 charges zero trading fees or asset management fees.
There are a variety of ways to go about portfolio building, including more than 80 "expert" portfolios you can follow for the purpose of mimicking.
The way M1 places trades puts transaction timing out of your control. This will be an issue if you are taking a trading approach to your IRA.
Accounts with less than $20 and no trading activity for 90 days are charged a fee.
M1 does not employ financial advisors and offers very little help for setting financial goals. You also cannot consolidate external accounts for planning purposes.
- Account Minimum: $10
- Fees: 0.25% (annual) for digital plan, 0.40% (annual) for the premium plan
There are several ways to use Betterment: you can sync all of your financial accounts to get an overall picture of your assets without investing, you can invest in one of their portfolios, or you can create a Flexible Portfolio with some of your own specifications. Portfolios are rebalanced when necessary rather than on a set schedule. Betterment is very much a goal-based platform, and there are many planning tools available to users along with plenty of advice. You can attach a specific investing goal to each portfolio, which can be invested in different strategies. Funds for longer-term goals like saving for retirement can be allocated to one of the higher-risk portfolios, while shorter-term goals, such as funding a down payment on a house, can be allocated to the lower-risk ones.
Betterment has very easy-to-follow steps for setting a goal, and each one can be monitored separately. The asset allocation is displayed in a ring, with equities in shades of orange and fixed income in shades of blue. If you’re falling behind on meeting your retirement goals, for example, Betterment will encourage you to put more aside. This can be a helpful prompt, particularly for young investors who may not yet feel the urgency to save for retirement.
Betterment’s IRA account set up is quick and easy, and portfolios are fully transparent prior to funding.
You can sync external retirement accounts to your Betterment retirement goal to view your overall progress with ease.
Betterment makes it easy to change portfolio risk or switch to a different type of portfolio.
Users of the planning function are constantly nudged to fund a Betterment account.
The standard plan incurs a charge of $199–$299 to talk to a financial planner.
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