The best Roth IRA investment accounts, in many respects, offer the best overall retirement plan available. Unlike other retirement plans that provide tax-deferred income, Roth IRAs offer tax-free income. Once you reach 59½ and have been in the plan for five years, distributions taken from the plan are fully tax-free.
New Roth IRA investors can benefit from using an automated investment services like Wealthfront. Young professionals that worry about the inevitable ups and downs of the markets can diversify and use Wealthfront’s Automated Investing Account to manage risk, minimize taxes, and maximize returns.
Overview: Best Roth IRA investment accounts
- Our Pick: Wealthfront
- Best for self-directed investing: Fidelity
- Best for frequent trading: E*TRADE
- Additional best-for options to these and the competition
Wealthfront: Best for new Roth IRA investors
What makes Wealthfront perfect for new Roth IRA investors is the combination of investment management and a wider than normal investment diversification.
Wealthfront is designed for young professionals, anyone from passive investors who want expert digital guidance, to people who want to be smarter with money.
With low fees and multiple tax perks, automated investment management tuned in to your individual risk level make Wealthfront worth a look.
- Passive investing with automated management
- Tax-loss harvesting
- Ability to customize portfolios
- No fractional shares of ETFs in automated accounts
- No human advisors
Wealthfront invests your money in U.S. and foreign stocks and bonds (like virtually every other robo-advisor), but they also add real estate, natural resources, and dividend stocks to your portfolio. Since a Roth IRA needs to produce growth and income for decades, these additions are an excellent perk, because each provides its own set of returns. For instance, real estate can perform well even when paper assets don’t, and natural resources can offer protection against inflation. Not every robo-advisor allows investors to customize their portfolio, choosing from hundreds of different ETFs — but Wealthfront does! Wealthfront charges 0.25% of your account balance for management
Wealthfront doesn’t offer in-person advisors so, if that’s your preference, others from our list may be better options. Wealthfront does, however, provide a free financial planning service called Path to help customers manage multiple savings goals at once. This can help with personalized savings goals, like buying a house or saving for retirement with your Roth IRA.
Fidelity: Best for self-directed investing
If you’re a self-directed investor looking for a low-cost platform with every type of investment, Fidelity should be on your short list.
A Roth IRA with Fidelity is available in an account where you choose and manage the investments or with Fidelity Go® where you provide your goals and risk management and they’re chosen for you. There are no minimums to open either account and support includes 24/7 customer service.
Not only can you trade stocks, bonds, and options, but Fidelity is second only to Vanguard in the funds department. They offer the full range of ETFs, and some of the best known mutual funds available. Their fees are high on non-Fidelity funds, but they offer hundreds of commission-free funds as well. Their fee for automated investment management may apply depending on your account balance. While some of their fees can be quite high, Fidelity is a top-rated trading platform with exceptional customer service.
E*TRADE: Best for frequent trading
E*TRADE is an excellent choice for a Roth IRA, because it’s strong in both self-directed investing and managed portfolios. In fact, they have one of the top trading platforms in the industry.
E*TRADE will work best for: frequent traders, due to reduced trading fees on the options side; fund investors, due to the large number of commission-free ETFs and mutual funds; options traders; and investors looking to add managed portfolio options to their self-directed investment activity.
The basic trading fee for stocks, options, and ETFs is $0 per trade. They also offer commission-free ETFs and no-transaction-fee mutual funds. E*TRADE retirement investing with Core Portfolios has a low $500 minimum.
Most self-directed brokerage accounts and robo-advisors offer an option to hold a Roth IRA with them so continue to compare options until you find what’s best for your financial future. These include larger investments, those looking to be more passive, and even for Socially Responsible Investing.
Betterment: Best for hands-off investing
As a full-blown robo-advisor, and the first of its kind, Betterment is great for those who don’t know much about investing (and have no real interest in learning). All you need to do is fund your account, and Betterment takes it from there.
Betterment offers traditional IRAs, Roth IRAs, and SEP IRAs for individuals. Betterment creates your portfolio, allocating it between different exchange-traded funds (ETFs). Betterment has features that will rebalance and reinvest dividends for you. Not to mention, they do it all for a very low fee. There’s a $10 minimum required deposit to get started, and you can open an account and fund it with monthly contributions. It’s an easy diversified investment opportunity, but not the best option if you prefer more control.
M1: Best for no-fee investing
M1 offers a simple platform that makes investing easy and painless, while giving you more options than the standard robo-advisor.
The M1 methodology breaks everything down into “pies” and “slices.” Choose from a pre-made pie (i.e., a pre-made diversified portfolio) or add slices (i.e., individual ETFs or stocks) and determine the percentage of your portfolio you want the slices to make up. M1 even allows investors to buy fractional shares, whereas most brokers only allow investors to purchase whole shares.
After you’ve divided your investment, you can set up recurring payments or deposit manually, then let M1’s automated intelligence manage your portfolio in the background. M1’s array of services come with no management or commission fees, so you can squeeze the most out of your retirement savings.
Empower: Best for large investments
Empower, formerly known as Personal Capital, is targeting top earners with many — but not all — of their services. If you’re new to retirement planning and want your Roth IRA managed for you, you’ll need a minimum of $100,000 to work with Empower.
Empower is a hybrid digital wealth management company and powerful finance app. In addition to paid investment management and advisory services, Empower offers a number of free tools and calculators to help with everything from net worth tracking to saving and retirement planning.
- Easy-to-use app provides financial 'big picture'
- Tools and calculators are completely free to use
- Great security, including two-factor authentication
- Wealth management fees can be be high
- May be subject to upsells
Fortunately, Empower also has free services that provide Roth IRA assistance, like their Retirement Planner. You can see how anticipated expenses — like buying a home — will impact your target retirement goal, discover how much your savings will allow you to spend monthly in retirement, and even compare scenarios to see if you can retire early.
The advisory fee is higher than robo-advisors, but it’s appropriate for the level of service provided. If you prefer comprehensive investment management, Empower is in the business of investing, so they provide state-of-the-art digital tools and expert advisors to help you manage all of your investments, including your retirement savings.
Stash: Best for socially responsible investing
Stash designs a portfolio based on your risk tolerance and provide recommendations based on your investing profile, but you are responsible for managing the account.
Nevertheless, Stash is still a great starter Roth IRA account, because you can begin with an initial investment of just $1. You can make regular deposits into your Roth IRA account, which are invested in a wide range of stocks, bonds, and ETFs. Stash has two options for monthly plans: Stash Growth and Stash+. They include features like financial advice from expert advisors and a debit card.
You can also choose Stash’s “Missions and Causes” investment theme to support socially and environmentally responsible companies, making it our recommended option for socially responsible investing. Stash’s investment themes allow you to support companies that are socially and environmentally conscious.
Vanguard: Best for investing in mutual funds
Vanguard is the largest mutual fund provider in the world, and the second largest provider of ETFs. They’re the both for those who want to invest in mutual funds.
Their funds are so popular and efficient that they are commonly used in robo-advisor platforms. The Vanguard 500 Index Fund Investor Shares (VFINX), for example, is one of the most popular S&P 500 index funds in the world and is a common addition in managed portfolios.
Why Vanguard is so good for a Roth IRA is very similar to Betterment. Thanks to the Vanguard Digital Advisor, you can invest in either an ETF portfolio or an ESG (environmental, social, governance) portfolio and let Vanguard take it from there. Note that since Vanguard’s focus is mutual funds, their trading fees for individual securities are not competitive with other brokerage platforms.
Acorns: Best for passive saving and investing
Acorns is primarily a micro-savings account — but that’s why it’s so great for new Roth IRA account holders. Open an Acorns Later Roth IRA in just two minutes and receive recommendations for investment options immediately.
Acorns makes it easy to start investing (even if you know nothing) and provides helpful tools to help you save more automatically. In under 3 minutes, start investing spare change, saving for retirement, earning more, spending smarter, and more.
- Effortless automated investing
- Easy-to-use savings features
- Low-cost solution to manage money
- Flat monthly fee more expensive for smaller accounts
- Can use more robo-advisor features
Acorns works through a process known as Round Ups. Each time you spend money out of your connected account, it rounds up the payment to an even number and holds the difference. Once at least $5.00 is set aside from roundups, it’s transferred over to your Acorns investment account. You can also sign up for Acorns Checking and get a debit card to help you earn Round Ups in real time, along with interest.
The Acorns investment platform is a robo-advisor, which will handle investment selection and all the management responsibilities for your growing portfolio. All you need to do is spend money, and your Roth IRA account will begin to fill up. Set up your Roth IRA in only two minutes through their IRA program, Acorns Later.
There still are some competitive options out there that we didn’t note of above with a best-of feature, including some options that make our list of the best investment accounts. Frequently in the news, Robinhood, is one.
Quicker snapshots of some of these are provided below.
Robinhood is an intuitive stock trading and investing app that offers zero-commission trades on thousands of investments. Robinhood offers both taxable investment accounts and IRAs, both traditional and Roth. Overall, Robinhood offers a simplified trading experience beginners may prefer, but lacks more sophisticated trading tools and choices of larger online brokers. Check out our Robinhood review or alternatively, if the negative buzz associated with Robinhood is a turn-off, read our list of the best Robinhood alternatives.
Charles Schwab is one of the largest online brokers in the U.S., offering access to fee-free stocks and ETFs, low-cost options contracts, and even margin and futures trading. Charles Schwab is actually under the same umbrella as TD Ameritrade since Schwab acquired TD Ameritrade in 2020.
J.P. Morgan Self-Directed Investing
Along with an option to open a Roth IRA, J.P. Morgan Self-Directed Investing offers Chase clients tremendous convenience and new investors a clean and intuitive investing toolkit. J.P. Morgan Self-Directed Investing is Chase Bank’s stock market trading platform so you’re provided the same ecosystem and access to Chase’s renowned customer support team. Read our full J.P. Morgan Self-Directed Investing review.
How we picked the best Roth IRA investment accounts
To help you select the best option for you, we’ve compiled a list of the top Roth IRA investment accounts that stand out among the competition. Most either are a robo-advisor or have a robo-advisor program available if that’s what you’re looking for. Compare each, looking at what we think each is best-for, jump straight into opening your account and getting started, or read our linked articles if you want additional information.
Who are the best Roth IRA investment accounts for
Individuals earning below the maximum income. In short, a Roth IRA can provide you with a tax-free income source in retirement — this is the reason they’re so popular. Your older self will thank you for finding the best Roth IRA one (for you) now for later.
What is a Roth IRA?
In many ways, a Roth IRA is similar to a traditional IRA:
- Both plans have the same contribution limit.
- Both plans allow you to contribute $6,500 per year or $7,500 if you are 50 or older.
- Both plans allow for tax-deferred accumulation of investment income prior to retirement.
- Both are fully self-directed accounts that allow you to choose the trustee that will hold the account, as well as the investments within it.
But when it comes to taxes, traditional and Roth IRAs differ.
- Contributions to traditional IRAs are typically tax-deductible. Roth IRA contributions, on the other hand, are never tax-deductible.
- Distributions taken from a traditional IRA are generally subject to ordinary income tax. Roth IRA distributions, however, are tax-free (as long as you are at least 59½ years old and have participated in the plan for a minimum of five years).
The difference between a Roth IRA and a 401(k)
While traditional and Roth IRAs differ on the tax front, Roth IRAs and 401(k)s are different when it comes to their contribution limits.
The limit for annual 401(k) contributions is $22,500 for those under 50. Those 50 and older can contribute an additional $7,500 per year.
For Roth IRAs, the maximum annual contribution is $6,500 for those under 50, while those 50 and older can contribute an additional $1,000 for a total of $7,500 per year.
Any individuals earning more than $153,000 per year (or $227,000 for couples) are ineligible to contribute.
For a comprehensive list of differences, here’s a handy table:
|Contributions limits||$6,500, plus a $1,000 “catch-up contribution” if you’re 50 or older ($7,000 total)||$22,500, plus a $7,500 “catch-up contribution” if you’re 50 or older. ($30,000 total)|
|Tax deductibility of contributions||Not tax-deductible||Tax-deductible|
|Employer matching contributions||None available||An employer may match between 50% and 100% of the employee’s contribution|
|Tax treatment in retirement||Distributions can be withdrawn tax-free||Both your contributions and investment earnings are only tax-deferred. You pay income tax when you withdraw|
|Early withdrawals||Contributions can be withdrawn at any time, tax-free and penalty free. Investment income earned subject to income tax and the 10% early withdrawal penalty if taken before age 59 ½||10% penalty|
|Loan provision||None||Can borrow up to 50% of the vested value of your plan, up to a maximum of $50,000. Repayment must typically be accomplished within five years|
|Investment options||Self-directed||Restricted to the investment selected by your employer|
|Required Minimum Distributions (RMDs)
||Not subject to RMDs||Fully subject to RMDs|
Roth IRA FAQs
Q: Can I open a Roth IRA and another retirement account?
A: Yes! You can contribute to a Roth IRA, 401(k), traditional IRA, and as many other accounts you want — and you should!
But, make sure you understand the different tax rules associated with each. Tax-deferred accounts include 401(k)s, 403bs, traditional IRAs, solo 401(k)s, and SEPs. Post-tax accounts include Roth 401(k)s and Roth IRAs.
Q: Are there income limits to make a Roth IRA contribution?
A: Yes, there are income limits for Roth IRA contributions.
With a traditional IRA, you can still make an IRA contribution, even if you exceed the income limits (your contribution will be either partially or completely nondeductible). But with a Roth IRA, you are not permitted to make a contribution at all once you exceed the income limit (regardless of whether or not you are covered by an employer-sponsored retirement plan).
Q: What’s a Roth IRA conversion?
A: A Roth IRA conversion is another way to fund your retirement account. Instead of making annual contributions, you take funds from other tax-deferred retirement plans (like traditional IRAs, 401(k) plans, and 403(b) plans) and roll the balances over into a Roth IRA account. One of the biggest advantages of doing a conversion is you can convert a large retirement balance to a Roth IRA quickly.
Q: How do I access money in my Roth IRA?
A: At any time, you can sign in to your account and withdraw your contributions to a Roth penalty-free. It’s the earnings on your investments that you can’t withdraw without getting hit with a 10% penalty.
The penalty on the investment earnings portion of your withdrawal will apply unless you are at least 59½ years old and have had the account for at least five years.
Q: Are Roth IRAs subject to required minimum distributions (RMDs)?
A: According to IRS regulations, virtually all retirement plans are subject to RMDs.
Beginning at age 70½, you must begin taking annual distributions from your retirement plans, based on your life expectancy in each year a distribution is made. The one exception is the Roth IRA. Your Roth IRA can continue accumulating investment income for the rest of your life — literally! This will enable you to avoid outliving your money and leave a larger estate to leave to your loved ones.
The absence of the RMD requirement is a major reason why people do Roth IRA conversions from other retirement plans.
Summary: Best Roth IRA investment accounts
Most people underestimate the amount of income they’ll receive in retirement, particularly since they’ll probably have multiple income sources. The tax-free income feature of the best Roth IRA investment accounts is a great way to avoid unexpectedly high tax liability in retirement.