Best Brokers for IRAs

August 17, 2018 — 4:41 PM EDT

Your online broker lets you open a variety of accounts, but for those taking advantage of the tax benefits of an Individual Retirement Account (IRA), a few other features come in handy. 

The first thing to decide is which kind of IRA you want to invest in. You may even have both kinds: standard (also called traditional) and Roth, as long as you don't contribute more than your yearly contribution limit ($5,500 over all your accounts; plus $1,000 more if you're 50 or older).

The two types of IRAs share many characteristics; the main difference is when you can take the tax benefits. With a traditional IRA, many investors can make their contributions tax-free: There are restrictions based on income and whether you are eligible for an employer’s pension plan. With a Roth IRA, your withdrawals during retirement are not taxed (see Best Brokers for a Roth IRA for details). For both types of IRAs, any income you generate during your years of contributing is not taxed.  You can convert a traditional IRA to a Roth IRA at any point, but you cannot convert back.

Once you reach the year in which you turn 70½, you are required to stop contributing to your traditional IRA and start withdrawing money from it. The amount you must withdraw every year, called the RMD (required minimum distribution) depends on your age and the balance in the account. What's more, you're taxed on that money at your individual income tax rate – and have to take it out whether you need it or not. It’s important that your broker keep you informed of your withdrawals, as there are significant tax consequences for those who do not take their RMD. (Roth owners do not owe RMDs.)

The winners in 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. 

Investopedia’s Top Traditional IRA Account Providers

See Full TD Ameritrade Review

  • Commission: $6.95 stock trades
  • Account Minimum: $0
  • Best for Retirement Education

Open Account

TD Ameritrade customers can analyze the holdings in their retirement plans, via the company’s partnership with financial consultant FeeX, and are encouraged to get rid of expensive mutual funds and ETFs in favor of lower-cost ETFs in order to generate higher returns. 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.

✓  Pros

 

❌  Cons

•  Extensive educational resources.   •  Commissions are slightly higher than most other brokers.
•  Wide availability of commission-free ETFs.   •  Platform has suffered some outages during high trading volume days.
•  A variety of annuities available at relatively low cost.   •  Tools are spread out over several websites, downloadable platforms, and mobile apps, and you may have trouble finding your favorites.
•  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.    

 

See Full Merrill Edge Review

  • Commission: $6.95 stock trades
  • Account Minimum: $0
  • Best for Goal Setting    
Open Account

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.

✓  Pros

 

❌  Cons

•  Personalized portfolio analysis.   •  Cannot automate a trading strategy for stocks.
•  Customizable news feed with more than 35 providers.   •  No commission-free ETF trades, though customers with high account balances qualify for {FC: up to] 30-100 free stock/ETF trades monthly.
•  Retirement planning tools are top-notch.   •  Complex options trading is limited.

 

See Full Fidelity Review

  • Commissions: $4.95 for stock trades
  • Account minimum: $0
  • Best for New IRA Accounts
Open Account

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.

✓  Pros

 

❌  Cons

•  Fidelity offers everything from stocks and options to annuities and life insurance.   •  Automatic dividend reinvestment is set for the entire account; to change it for a particular security, you must call customer service.
•  Low transaction fees, plus terrific order-routing technology that lowers the cost of a transaction by seeking out price improvement.   •  On heavy trading days, the platform can be unreliable.
•  Abundant online help, including a chatbot that can answer most customer queries.   •  High account balances or frequent trading is required to access Active Trader Pro, the more advanced platform.

 

See Full Charles Schwab Review

  • Commission: $4.95 for stock trades
  • Account Minimum: $0
  • Best for Low Cost Retirement Investing
Open Account

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.

✓  Pros

 

❌  Cons

•  No-cost robo-advisory, Schwab Intelligent Portfolios, is a good place to start investing for retirement.   •  Certain mutual funds incur a $76 fee when purchasing.
•  More than 200 ETFs can be traded without incurring transaction fees.   •  There is no report spelling out expected dividend income.
•  ETF research center also has a screener for closed-end funds, which can be used to generate income in retirement.   •  $0 to open an account only applies if you also open a Schwab One checking account simultaneously.

 

See Full E*Trade Review

  • Commission: $6.95 for stock trades
  • Minimum to open an IRA account: $0
  • Best for Post-Retirement IRA Account
Open Account

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 built into the OptionsHouse platform is available, 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. 

✓  Pros

 

❌  Cons

•  Terrific guidance, with dozens of short videos, available in the Planning section.   •  No forex or international investments (besides targeted ETFs) available.
•  Mobile apps include all of the retirement planning tools, including tracking progress towards your goal.   •  Certain advanced trading capabilities are only available on Power E*Trade, which has volume and balance restrictions.
•  200 ETFs that can be traded without incurring a commission.   •  Automatic dividend reinvestment requires broker assistance

About Our IRA Broker Review Methodology

At Investopedia, we started from scratch to build a better brokerage recommendation tool and objective reviews of IRA brokers. Our mission is to provide an unbiased and accurate analysis – so that you can make smarter investing decisions.

We want to help find you the best online IRA account provider so we examined more than 100 variables, from pricing and fees to special features. No single online broker was the best in every category, so you should review our complete list of broker reviews to identify the firm that best matches your priorities.