Roth IRA accounts are wealth building tools that grow your earnings tax-free. Many financial institutions offer Roth IRA accounts to their customers. After searching Google for Roth IRA, I came across tons of banks/credit unions that offer Roth IRAs. Haven’t opened yours yet? Well, you no longer have an excuse. Everything you need is right here.
Roth IRA Rules & Benefits
- Contributions can be withdrawn anytime without taxes or penalties.
- Distributions, interest, and dividends are tax-free if you are at least 59 ½ and the account has been established for longer than five years.
- You can contribute after age 70 ½ as long as you have earned income.
- No required minimum distribution (RMD) during your lifetime.
- Tax-free distributions can be passed to your beneficiaries.
You should consider a Roth IRA if:
- You want tax-free earnings.
- You are already saving for retirement with an employer-sponsored plan.
- Your income does not exceed $169,000 for married taxpayers or $116,000 for single taxpayers
- You want to invest for retirement but may need to access your savings.
Best Roth IRA Accounts
Opening your Roth should be convenient, not an arduous task. Just make sure you open one somewhere, although maintenance fees and account minimums are factors to consider. Each bank/broker provides different benefits that include price, ease of use, accessibility, customer service, etc. Compare the best no fee IRAs and fee requirement IRAs in the business. Our personal favorite is TradeKing
| Bank Name | Annual Fees | Commissions | Minimum Balance | Overall Rating (1-5 Stars) | Comments |
| TradeKing Roth IRA | $0 | $4.95 | $0 |  |
Pros: Great Customer Service, Fast Trade Execution, Retirement Education, Active investing community and Top level security.
Cons: Slow site speed, Difficult to Transfer Moeny |
| Etrade Roth IRA | $0 | $12.99 | $0 | |
Pros: Fast trade execution, Fast website, Decent customer service, Great tools, Great Reputation
Cons: Higher Commissions |
| OptionsXpress Roth IRA | $0 fees | $14.95 | $0 | |
Pros: Fast website, Good Customer Service, Easy to Use Tools, Educational Tools
Cons: Expensive Commissions |
| Fidelity Roth IRA | $0 | $19.95 | $1,000 | |
Pros: Fast website, Excellent Customer Service, Great Reputation, Average Security, Largest Retirement Fund Broker
Cons: Expensive Commissions, Expensive Transfer out fees |
| T.Rowe Price Roth IRA | $10 fee/year for accounts < $5,000 | $0 for No Load Funds | $1,000 | |
Pros: No Load Funds, Fast Website, Good Security, Good Education
Cons: Not for Traders, $1k Minimum to Open Account |
| Bank of America Roth IRA | $30 fee for balances < $10000 | $0 | $0 | |
Pros: $0 Trades with $25k+ Account, Good Security, Fast Website, Good Execution
Cons: Lack of Tools, Lack of Education |
| Zecco Roth IRA | $0 fees if over $2.5k balance | $4.50 | $0 | |
Pros: 10 Free trades per month if you qualify, Easy to Use website, Easy to Transfer Funds, Helpful Investment Community
Cons: Need $25k+ to Qualify for Free Trades, Slow Site Speed, Lack of Customer Service |
Delaying Your Roth IRA 1 Year Can Cost You Thousands of Dollars
Putting off your retirement savings for even just 1 year can costs you thousands of dollars in the future. An extra year of compound interest could boost your IRA balance at retirement by thousands because the money had 365 more days to earn interest. Not to mention any total gains you will earn on stocks, mutual funds, bonds, or annuities.Once you open your Roth Retirement account, you can choose the best Roth IRA funds based on your risk aversion and time horizon.
My Favorite Roth IRA Broker: TradeKing
I’ve had a TradeKing account for over 4 years (even before I launched InvestorTrip.com) and they are extremely consistent with their product offering, customer service, and overall business practices. While other brokers have fine print requirements (like Etrade and Zecco), Tradeking is straight forward with their $4.95 stock trades and this fee has never changed since I joined years ago.
Still Need Answers? Read our 2009 Roth IRA Retirement Guide
If you are looking for more comprehensive information on roth ira accounts, please read our online Roth IRA guide now.
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You forgot the most important Group that has one of the best rates Vanguard group
Check them out.
Vangard is now on the list. Thanks, Vause!
I have a ROTH IRA through a fraternal organization called Thrivent Financial for Lutherans. What is the difference between investing through a fraternal organization like Thrivent, and a non-fraternal like Fidelity or Vanguard?
The main difference is that full-service brokerages offer exceptional investment advice and can assist you with your investment goals, plans, and purchases. When I have a question about my Roth IRA, I call up a Fidelity Representative, and they always share insightful information with me.
Except for the investment advice, I believe all else is the same. Also, you don’t have to own a Fidelity Account to buy into Fidelity Funds or anything.
I disagree with you. Look at the expense ratio. I believe Vanguard or Fidelity have the best expense ratios. If you dont look at this you will lose a lot of money in the long run. Also, you have to look at the companies that have loads. I know fidelity and Vanguard do not have up front fees like loads.
Also, I still like your blog. Lets exchange links!!
Vause
Your actual investments and where you open your account are two separate entities. Banks do not charge expense ratios on your account balance, the fund manager charges you a percentage of your mutual fund holdings. The same goes for load fees. These only apply to purchases, not your actual account. If you were to open an Roth IRA at Fidelity and never purchase 1 mutual fund, you would never have to pay expense ratios, load fees, or anything else. See the difference?
Yes, I see. Thanks
Vanguard is excellent.
Thanks for your comments. You’ve inspired me to update the list. Looks a lot better now.
And I’ll contact you about a link exchange!
Well, I would be true to my military collegues if I didnt metion USAA for mutual fund. This is a military members and family only mutual fund service.
you can find the website http://www.usaa.com
However, I do use Vanguard for Roth IRA.
TJP, Now since you have a list of Roth IRA accounts. The big question is which one do you have?
I have an account with Fidelity Investments, and bought in the Fidelity Freedom 2050 fund (FFFHX). Most of my funds are invested in the FFFHX lifecycle fund, along with a small cash balance on the side.
Vanguard is very, very good. If I hadn’t gone with Fidelity, Vanguard was my next choice.
Just to let you know. I have vanguard 2045 fund. I like that we can just let our money sit and they do all of the work. What is your funds expense? Mine is something like 0.21%
That’s incredibly cheap. Fidelity charges 0.83%, which is a bargain in my opinion.
I checked out Vanguard’s 2050 fund, and the expense ratio is only 0.21%. It looks like I need to reallocate my lifecycle fund!
anyone have experience with TD Ameritrade? Is their service good? Sometimes with so many mergers and corp changes, it can change their service levels. Just wondering. thx
Nope, Sorry I have not. Only Vanguard. BTW TJP, I would change to vanguard yet. I am sure you are making too much money with fidelity after a increase of the dow 100 points today. Secondly, look at Vanguard 2045 fund. It is less expensive than 2050 so you can hold more shares than you can get more dividend payments!!
I wrote a review on TD Ameritrade a while back. I hear they are pretty good in terms of cost and customer service.
I was considering a Vanguard International fund instead of the target one. I can probably squeeze out a 1% or 2 more by investing in their global equity fund.
Hey you should look at vanguard again. They redid their fee structure. If you signup for e statements their is no fee if the balance is less than 5,000. One thing for sure vanguard is taking cared of their investors!!
TJP - I’m just starting to look into a Roth IRA. I have been talking with State Farm Insurance to open an account, but am nervous of them stating a 5% fee on every deposit made to the account. The accounts are apparently managed by Barklay and have a slew of Berklay “LifePath” funds to invest in.
Any helpful suggestions will be greatly appreciate.
State Farm’s Roth IRA page
http://www.statefarm.com/learning/life_stages/retire/rothira.asp#investment_options
You are wasting money with them. Do not buy from them!! Look at vanguard or fidelity!!
Vause- I’ve started to realize the same. E-Trade and Scottrade, and TD-Ameritrade are also on my list. The same general commission tables apply as I’m investing under the Roth account, correct?
Just look at vanguard if you are interested in mutual funds. They have the best everything
@ DC
You don’t have to pay 5% contribution fees! That’s plain ridiculous.
Here’s a good post on how to setup your Roth IRA for free. Most reputable investment firms allow you to invest for retirement almost for free.
But don’t fret! Welcome to the Roth IRA club. I’m 20 too, and trust me, you’re doing a very, very smart thing by planning for retirement.
I decided to go with T. Rowe Price, which may have been the hardest step. The next hurdle will be to figure out how I can fully fund it while in school for the next 2 years.
Does anyone have information for USAA? Anyone know what kind of fees they have?
@ DC
I faced the same problem as well. During my freshman year of college, my annual income was very little, so I resorted to credit cards for all expenses.
Huge mistake! But I eventually learned that there are ways to earn money without working a job.
I wrote a few posts on earning money online before:
Basically, start getting creative and find other ways to generate some income. For me, the internet worked. For you, you may start a small business on campus, or use your existing talents to perform consulting work for needy clients.
If you utilize your talents to help the better good of society, money will follow.
This may be en “elementary” question but i am going to ask it anyway. What do you mean when you ask “What is your funds expense?” What is the .21%?
-this blog is really helpful. I just began researcing who to open an IRA with.
Maggs, what they mean by the .21% fund expense is this. If you were to hold a account with Vanguard with $4,000 with a .21 % annual fee you would be charged a $8.40 fee for that year. Compare that to a .83% fee with Fidelity you would be charged a fee of $32.20. This may not seem like much now but add the lost compounding over the life of the IRA (30+) years and that could be in excess of tens of thousands of dollars if not more. ***One thing to remember is that both Vanguard and Fidelity offer two of the BEST funds both of which have fund expenses below the average. I take an educated guess when I say that perhaps Vanguard has a slightly lower fund expense because the minimal investment requirement but I could be wrong. I hope this post was of some help.
I set up a Roth IRA a few years ago with State Farm before I was really fully informed about the investment benefits. It was all a bit overwhelming then, and I am grateful to a friend who kept pushing me to start a retirement fund. Although I’m not unhappy with State Farm, the more I start to understand what I have, the more I want to take an interest in how its handled, and would prefer working with an investment company. Am I stuck with State Farm, or can I work with another company like those recommended above on this account?
Hello,
I opened a Roth IRA in 1999 located in a credit union in NY and I now reside in FL. I was never informed of any investment options or advised to make regular deposits to help it grow—I assumed it would grow on it’s own. I never made another contribution until I changed jobs and rolled my 401k investments into my Roth IRA.
I have learned that you can invest the money in your Roth IRA and would like to know how. Other than receiving bank statements, I’ve never received any information for how to invest my Roth IRA.
I just started consolidating my NY and FL accounts to WAMU for the 5% interest savings account. Any suggestions if I should move my IRA to WAMU, or I have read many suggestions on this sight highly recommending Vanguard.
Can you please advise?
Thanks!
MB
@ GMB
You can transfer your funds at any time, however most financial institutions charge transfer fees or another commissions based on your account structure.
Here’s what I suggest: Pick some financial institutions on my list above, visit their websites, and give them a call. Feel them out until you find a comfortable fit.
The advantages to having your Roth IRA with a pro investment firm are countless. If you decide to make the switch, do some homework so it becomes your last.
@ MB
You don’t have to transfer your Roth IRA to grow the balance. A roth IRA is not an investment; it’s an account that holds investments like stocks, bonds, etc. With that said, read up on investing before buying an investment in your Roth IRA.
Visit the library and pick up a few books, listen to tapes & radio shows that feature investment segments, scour the internet for information rich sites on investing.
Before moving your account, I would invest in knowledge first. Moving your Roth IRA will only incur fees; not necessarily increase your net worth.
Good luck, and thanks for the question.
I’ve had a ROTH IRA at Wells Fargo Bank for years but didn’t contribute to it very much, and for that I’m kicking myself.
I was in a confused state of “huh?” when I opened the account and don’t remember anything about it. I don’t know if I’m being charged any fees or what! I can’t seem to find the information on the Wells Fargo website.
I, like MB, have recently opened up a checking and savings account at WAMU because they have fewer hoops to jump through and fewer fees than Wells Fargo. I am also wondering if I should transfer my ROTH and am not sure where to go.
I’ve been treating the ROTH like a regular savings account that I can only put 4000 into a year. If I do only that… will it still grow without me doing anything else?
I guess my biggest stumbling block is HOW to buy. When I access the website and view the page that displays my ROTH holdings… well, that’s as far as I get. I don’t know where to navigate to invest!
There’s no link on the page next to my funds that says, “Purchase a diversified portfolio that isn’t high risk and that will give an average return of 8% that doesn’t involve giving any money to big oil moguls and their feckless offspring.” Do You have any of that on aisle 8?
It’s just so overwhelming. I wish SOMEONE in my family was smart with money. I’ve been wrestling with this for so long because I don’t want to end up riddled with debt and a burden to my little girl in my dotage.
I’ve been researching on my own and managed to get this far, but realized something was wrong when I noticed that my money market savings account and my ROTH were averaging about the same interest every month.
I was flummoxed. So I started looking closely at my statements to figure out what my interest rates were. Turns out my Wells Fargo Money Market savings account was giving me an APY of only0.74. I was floored after seeing numbers like 4.3 and 5.0 and 5.31 at other various online savings accounts offered through mailings and websites. (As an added kick in the pants, Wells Fargo makes you keep a 5,000 balance in your joint accounts in order to not be charged a monthly fee for just having the savings account. Lame. If I need to pull out the funds in my time of need, that’s when the vultures will start picking away at the leftovers every month. Lame lame lame.)
Also, my wells checking account needs to have 1k just sitting in there untouched or I’ll be charged $8 a month just for having the account because I no longer have direct deposit. (I’m a new Stay-At-Home-Mom and missing my paycheck…) I’d much rather invest that money in a high intrest savings account or stuff it in my ROTH.
So even though I’ve been a WF customer since 1996, I just opened a free checking account at WaMu.com with an online savings account that boasts a 5.0 APY. That’s a load more than the paltry 0.75 I was getting with my old savings account. I still have to transfer the funds and close my old accounts. (I just opened the new ones yesterday.)
Then I panicked. I couldn’t find out what interest rate my Roth IRA was gaining at. I looked everywhere on the site and didn’t find ANYTHING. I assumed that when I deposited money into my ROTH IRA that Wells Fargo, an institution that knows a lot more about investing than I do, would take my money and put it into something safe that’s good for retirement accounts to grow on. I thought that was the reason I wasn’t allowed to touch it without penalty, because it was INVESTED. Otherwise it would just be a regular savings account.
Now I read that I have to actually pick my investments! I have to purchase mutual funds or other dingly dangs that I don’t know much about to actually make the ROTH work and that is very scary. I’m 29 years old and this money has just been sitting in this stupid account since I was 22 when I opened it because I read that opening a ROTH IRA in your early 20’s was the best way to become a millionaire by the time you reached age 65.
I didn’t realize that I’d have to max contributions every year, (until I started doing more research yesterday) and now I’m just sick at the thought of all those lost investment years. But, spilt milk and all…
So I suppose what I really need to do is find someone who can put up with my ineptitude (I was always slow in math) and hold my hand through this process. I wish there was more instructions online that were very A-B-C about the whole process. Most websites and financial advice taken from the web always says the same thing. “Buy what’s best for you! Invest in the best way that suits you!”
But what the hell does that mean to someone who doesn’t know what the best way is? I know that I can’t afford to take any losses, that I’m not a gambler. I like to be a safe investor and that’s why this process has been a very slow one for me. I’m terrified of getting nickel and dimed with fees and play all these bank “games” to avoid them.
Long story short, I haven’t found ANY information on the web concerning ROTH IRA’s with Wells Fargo and that’s a little worrying to me. How do I “spend” the money in that account? In the end what I’m really buying is a higher APY, right? I just shop around for the best return for the risk and plunk down my money, right?
Sorry for the novel… I’m just stressing out about all this. I don’t have anyone in my family to talk to about it. My husband overdrew his checking account so often that it was a huge monthly waste of cash so I took over all the finances. (He got through freaking calculus but can’t add and subtract his own money… just mind boggling.)
I’ve thought about going to the bank to sit and talk with someone about all this, but with a 12 month old in tow, it’s not something that would be good for my retention of information or the other customer’s sanity.
I thought I was doing the right thing just plugging money from my checking account to my ROTH account and doing nothing else but now I feel totally out of my league.
I’m in the same boat as Nicole, in that the major (possibly only) challenge I’m having is figuring out how to do anything with my IRA contributions online.
I have a little over $8k in a Wells Fargo Roth IRA “plan”. When I originally started, wells put the money in a retirement savings account, which made a ridiculously low interest rate similar (if not equal) to my well checking account.
After a few months I realized I should at least be making a rate close to my savings account (~5%), so I called wells and asked what my options were. They didn’t really do a good job explaining anything to me, but I got them to put my IRA funds into a 5 month CD.
I’ve re-invested a few times when the CD matured by calling wells again. A few weeks ago, when it matured again, I decided to put it back into a savings account so that it would be more “liquid” (the wells person called it that). I basically want to be able to transfer it somewhere else now. I’ve been looking at Vanguard and Fidelity accounts, and don’t want to have to wait another 5 months for a one week window to open a new acount (the wells CD will automatically renew one week after it matures).
So now my wells Roth IRA plan is sitting in a wells savings account making no interest, but at least I should be able to transfer it somewhere else. I just need to figure out how, and would like to be able to do it without using a phone.
I find that when I call up Wells Fargo I get someone who must be dedicating their life to mastering the art of being unhelpful. They make simple concepts sound super complicated and continuously throw out irrelevent information, most of which I know (a perfect example would be the interest rate of a wells savings account that has no money in it and that I have never used and have no interest in using). They seem to find silence painful, so rather than listening to my questions and maybe thinking about how to answer them, they just start talking. So annoying…
Anyone know of a place that offers a ~5% savings account that I could put my Roth IRA contributions in? If I can keep the money in a wells savings account, shouldn’t I also be able to put it in a savings account at any other company? If so, how do I do it?
Thanks for any help.
Nicole,
You sound like a perfect candidate for a target date fund. It’s basically a mutual fund that “automatically” adjust the allocation as your retirment date nears. You can open an IRA at just about any of the institutions listed above and search for a target date fund that suites your needs. For example, if you’re 29 now and plan to retire in say 30 years, you can search for a target date fund around 2040. Do a “google” search for target date funds to learn more about them. Hope this helps you and anyone else who may be overwhelmed by the task of choosing mutliple funds to invest in.
Have you ever looked at some of the Roth IRA’s from an insurance company? I’ve heard they have higher fees, but trying to get a bottom line fee out of a prospectus seems to be beyond my little brain’s capacity. Specifically my wife was some funds at Mutual of America.
Speaking of Roth IRAs and Rollovers I found this company that promotes a secondary investment plan beyond your 401k or IRA. You can read more about then at http://dometri.com. In fact, they work very much like a hedge fund in that they specialize at short term real estate investments with rent to own exit strategies. They take care of everything from start to finish so you are considered a passive investor with no active duties. Also, they do not fall under the constraint of only working with accredited investors, those with $1 M liquid assets available. If you want to learn more about their day to day activities, check out their blog at http://blog.dometri.com
Wow, Great blog guys…
After reading this blog. And also going through this forum
http://www.diehards.org/forum/viewforum.php?f=1
I would recommend every one this forum.. best forum ever for Investment and Personal Finance
One should go with Van Guard and Select electronic delivery of statements.
Select this Fund
Vanguard® Target Retirement 2045 Fund
and you are good to go…
TJP What do you think about this idea??
Hey Guys,
This is a very helpful website and I thankyou all for the information you share.
Here is my situation… I wanted to invest money and I was a novice . I moved with a new job and at the new location visited H&R Block for some advice. The financial adviser knew my pay packet and lured me in opening a traditional IRA ($4000) with them. She knew I had a 401k account with the company but again lured me in opening a 401k account ($10,000) with heavy account maintainance fees.
Tax season is close and with a little education I now realize the amount in my traditional IRA will not be deductible as I have a 401k with my employer and above the pay bracket.
Also my 401k with H&R is not tax deductible. I am so disappointed. Could anyone advice me. Could anyone refer me to the best IRA (ROTH) available. After investing in Roth should I invest completely on in my company 401k or open a separate Individual Retirement Account?
I thankyou for your time and help.
Regards,
Sid.
Ronak,
Vanguard has an excellent section on funds, but I would recommend the index funds over target mutual funds.
Most target funds have poor asset allocation (usually an overabundance of bonds in the portfolio), plus the expense fees can add up in the long run.
I wrote a post on Vanguard Index funds that you should read. It contains more information on the arguments I listed above.
1. Stop treating your Roth IRA like a traditional savings account. Your Roth IRA is an investment account that holds stocks, funds, and fixed income investments.
2. Funding your Roth IRA is about 50% of the battle; the other half requires that you invest in securities that appreciate over time.
I would recommend buying into a low-cost index fund at the moment, but also consider investing within your comfort zone once you buy into those index funds.
The good thing is you care about your Roth IRA, and once you begin to manage your retirement funds, your balance will grow.
I promise
Sid,
You are eligible for the Roth IRA if you earn $99,000 as a single tax filer or $150,000 if you file your tax return jointly. So first, make sure you are eligible to open a Roth IRA.
If so, I would recommend:
After fulling maxing out your Roth IRA, go ahead and max out contributions to your 401k. I wouldn’t worry about a traditional IRA since they do not carry the same tax benefits as a Roth IRA.
To find the best Roth IRA, view the table on this page and check out some of the websites. I opened my Roth IRA with Fidelity, and highly recommend their services.
Hello! Here is the boat I am in-I want to open an account but get too overwhelmed when I have to make choices about what to invest in. I went on the fidelity site and they asked if I wanted aggressive, growth, balanced, moderate, etc. At 30 years old what is the most logical path to take? I know it was not smart to not open a Roth earlier, but this is whee I always just get stuck and confused. Thanks!
Hi Anthony,
It really depends on your risk tolerance and aversion. Since you’re only 30, you should focus on either growth or aggressive growth to boost your capital appreciation over the long run.
I know all the strategies, methods, and choices can be overwhelming. So I recommend deciding your long term investment goals upfront, then chart out a plan to get there.
If you don’t mind the volatile nature of the stock market, then think about investing in some common stocks.
If the market movement upsets you, then go with a low cost index fund.
Finally, don’t worry so much! You opened the account, and that’s the most important thing.
I suggest you open up a Self Directed IRA. I believe this can also be a ROTH Self Directed IRA. With this you can invest in Real Estate Related Deeds of Trust and earn an 18% return on your money. It is really hard to beat 18% return in todays market.
Daniel
I started with Dreyfus 7 years ago. I invested $2500 each in their Emerging Leaders Fund and S&P Index Fund. Ive been contributing anywhere between $50 to $100 per month to each. My current Balance makes me feel as if I’m waisting time and money. Are these Funds that bad?
Hi Sherwin,
I’m not very familiar with Dreyfus funds, but if you’re frustrated with the results, why not consider index funds instead?
Index funds are cheaper than mutual funds, plus you own all of the market so you benefit from the gains of the S & P as a whole.
Check out my post on Vanguard Index Funds for more examples.