If the kind of Individual Retirement Account you choose is a Roth, you've already made some important decisions. You've decided that you're willing to forego a tax deduction on your contributions now – you get them with a traditional IRA, if you qualify for deductions based on income and whether you are eligible for an employer's pension plan – in favor of tax-free income when you retire.
That's a big deal: Because you've already paid taxes on your contributions, you don't have to pay a penny more on the money (and everything it has earned) once you withdraw it when you're 59½ or older. With a traditional IRA, you're taxed at your regular income rate on everything you withdraw.
In addition, both types of accounts provide tax-free growth of your contributions until you retire, which is why finding the right online broker is crucial. You want to ensure the best chance of building IRA wealth.
The best brokers for your IRA category 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 do not apply an annual fee for managing your IRA, so you can keep that money growing for your retirement. We have chosen the following brokers as the best options for a Roth IRA:
- Merrill Edge
- Fidelity Investments
- TD Ameritrade
- Charles Schwab
- Account Minimums: $0
- Fees: $6.95 per stock trade. Options trades $6.95 per leg plus $0.75 per contract
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 also received awards for Best Web Trading Platforms, Best for Beginners, Best Stock Trading Apps and Best for IRAs.
Personalized portfolio analysis
Top notch retirement planning and life stage planning tools
Customizable news feed with content from more than 35 providers
Customers with high account balances can qualify for 30-100 commission-free stock/ETF trades
No commission-free ETF trades, though customers with high account balances can qualify for up to 30-100 free equity trades monthly
Complex options trading is limited
Self-directed investors may get annoyed by the seemingly constant push towards hiring a financial advisor
- Account Minimum: $0
- Fees: $4.95 per stock/ETF, $4.95 plus $0.65/contract per 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.
Fidelity also received awards for Best Overall Online Brokers, Best for Beginners, Best Stock Trading Apps, Best for ETFs, Best for Penny Stocks, Best for IRAs, Best for International Trading, and Best Web Trading Platforms.
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, and you can choose from 265 commission-free ETFs
The platform suffered some outages during heavy trading days in 2017 and 2018, but Fidelity has been investing heavily in the infrastructure to keep this from happening in the future
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: $6.95 for stock and ETF trades, $6.95 per leg plus $0.75 for options
TD Ameritrade customers can analyze the holdings in their retirement plans, via the company’s partnership with financial consultant FeeX, and are encouraged to generate higher returns by getting rid of expensive mutual funds and ETFs and replacing them with ETFs with lower management fees. The firm offers more than 300 ETFs that trade commission-free. You can go it alone and make your own investing decisions, or partner with one of TD Ameritrade’s financial planners, to set goals and track your progress. TD Ameritrade’s retirement calculator is available to the general public, so non-customers can check out the planning tools before opening an account.
TD Ameritrade also received awards for Best Overall Online Brokers, Best for Day Trading, Best for Options Trading, Best Web Trading Platforms, Best for Beginners, Best for ETFs, Best for IRAs and Best Stock Trading Apps.
The education offerings are designed to make novice investors more comfortable with a wider variety of asset classes
Wide availability of commission-free ETFs
Numerous tools for fixed-income investing, including over 40,000 bonds and more than 400 bond ETFs, of which approximately 300 can be traded commission free
Income Estimator tool shows interest and dividends coming up in the next 12 months
Commissions are higher than most other brokers and margin rates are very high
Tools are spread out over several websites, downloadable platforms, and mobile apps, and you may have trouble finding your favorites
- Account Minimum: $0
- Fees: $4.95 per stock and ETF trade, $0 for Schwab ETFs and $4.95 plus $0.65 per contract for options
Schwab offers a wide range of assets in which to invest and – after integrating the optionsXpress platform – also has some terrific 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 design an approach to generating income safely. Its Retirement Income Quiz is worth taking just to see which areas of financial freedom you might want to study further.
Charles Schwab also received awards for Best Overall Online Brokers, Best Web Trading Platforms, Best for International Trading, Best for Options Trading, Best for Penny Stocks, Best for Beginners, Best for IRAs, Best for ETFs, and Best Stock Trading Apps.
No-cost robo-advisory, Schwab Intelligent Portfolios, is a good place to start investing for retirement
More than 200 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
$0 to open an account only applies if you have open a Schwab One checking account
- Account Minimum: $500
- Fees: $6.95 stock and ETF trading
E*TRADE has made a concerted effort over the last two years to improve its retirement planning services. To that end, it offers its E*TRADE Complete IRA account for those who are eligible to begin withdrawing cash, including the ability to write a check and have that amount counted towards the client’s RMD. All the options capability from the OptionsHouse platform is now built into Power E*Trade, including the education and guidance. E*TRADE was one of the few larger brokers that survived the trading surges of 2017 and 2018 relatively smoothly as well.
E*TRADE also received awards for Best Web Trading Platforms, Best for Options Trading, Best for ETFs, Best Stock Trading Apps, Best for IRAs, and Best for Beginners.
Terrific guidance, with dozens of short videos, available in the Planning section
Mobile apps include all of the retirement planning tools, including tracking progress towards your goal
200 ETFs that can be traded without incurring a commission
No forex or international investments (besides targeted ETFs) available
Certain advanced trading capabilities are only available on Power E*Trade
Automatic dividend reinvestment requires broker assistance
Commissions are higher than average, at $6.95, but frequent traders qualify for $4.95 fees
Investopedia’s mission is to provide investors with unbiased, comprehensive reviews and ratings of online brokers. Our reviews are the result of six months of evaluating all aspects of an online broker’s platform, including the user experience, the quality of trade executions, the products available on their platforms, costs and fees, security, the mobile experience and customer service. We established a rating scale based on our criteria, collecting over 3,000 data points that we weighed into our star scoring system.
In addition, every broker we surveyed was required to fill out a 320-point survey about all aspects of their platform that we used in our testing. Many of the online brokers we evaluated provided us with in-person demonstrations of their platforms at our offices.
Our team of industry experts, led by Theresa W. Carey, conducted our reviews and developed this best-in-industry methodology for ranking online investing platforms for users at all levels. Click here to read our full methodology.