Best IRA Accounts of 2020

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An individual retirement account, also known as an IRA, is an investment tool for retirement savings. IRA accounts are tax-advantaged, meaning you don’t pay taxes on what you contribute to the account until after retirement when the withdrawal period starts. The best IRA accounts offer customers great investing options and low fees over the long term.

Many of the best IRA accounts are found at the same places where you’d open up an online stock trading account. These are all great choices, but you ought to look at your retirement accounts with a different set of eyes. Where retirement is concerned, you probably shouldn’t be actively trading; slow and steady, with minimal hassle, wins the race.

The 8 best IRA accounts of 2020

  • TD Ameritrade – Best IRA overall
  • Charles Schwab – Best for customer support
  • E*TRADE – Best for no-fee mutual funds
  • Betterment – Best for long-view investors
  • Ally Invest – Cheapest IRA option
  • Fidelity – Best for active traders
  • Vanguard – Best for experienced investors
  • Fundrise – Best for real estate investing
Provider Minimum Deposit Online Trading Fee Promotion
TD Ameritrade IRA $0 none none
Merrill Edge IRA $0 none Up to $600
Fidelity IRA $0 none 500 free trades
Betterment IRA $0 0.25% Up to one year of free management
Vanguard IRA $1,000 $20 none
Charles Schwab IRA $0 none none
Ally IRA $0 none Up to $3500
E*TRADE IRA $0 none none

The 8 best IRA accounts of 2020

TD Ameritrade – Best IRA overall

TD Ameritrade is ranked as one of the best online brokers for both trading and long-term investing. As a client, you have access to any resource you need, from banking services to advanced trading tools, as well as face-to-face customer support at hundreds of brick-and-mortar branches nationwide. TD Ameritrade IRA accounts feature no account minimums and access to more than 300 no-fee ETFs. It’s a good choice for investors of all experience levels as well as beginners who want access to great customer support.

Charles Schwab – Best for customer support

Charles Schwab is known for its customer support and service. It takes care of its clients, regardless of how much money they’ve invested. At $4.95 per trade, Charles Schwab’s stock, ETF and option fees are among the most competitive in the industry, and you’ll find many mutual funds that are almost completely free of fees. You can decide whether you want to be active or more passive in managing your account without having to worry about meeting a required trading volume. Charles Schwab also features extensive retirement planning resources and tools and is a good fit for new investors as well as those looking for dedicated customer support.

E*Trade
E*Trade
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Betterment
Betterment
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E*TRADE – Best for no-fee mutual funds

E*TRADE is a well-known online broker, offering access to every investment product and resource you could need. While commissions on stock trades are higher than average, E*TRADE allows customers to invest in over 9,000 mutual funds, more than 4,400 of which have no transaction fee. E*TRADE is a good fit for people who want a variety of investments in their IRA, low-frequency traders and long-term mutual fund investors.

Betterment – Best for long-view investors

Betterment is an online investment platform that helps individuals plan their retirements with a variety of handy online tools. Betterment also features a five-minute account setup, no account minimum, and no minimum for withdrawals or deposits. Betterment is good for knowledgeable investors who want to “set it and forget it,” people looking to rollover a 401(k) and novices who are interested in learning as they go.

Ally Invest – Cheapest IRA option

Ally Invest is an online broker known for providing great value: Ally’s commissions are among the lowest in the industry at $4.95 per stock or options trade, and customers who either keep a $100,000+ balance or make at least 30 trades per quarter pay just $3.95 per trade. Ally Invest won’t hold your hand as much as the other full-service brokers, so its IRA account is a better fit for self-directed investors and people looking to save money on trading costs.

Fidelity – Best for active traders

You won’t need a minimum deposit to open a traditional IRA with Fidelity and you also won’t be charged a steep monthly fee. You may, however, need to reach a certain threshold to invest in some of Fidelity’s mutual funds. Other available investment vehicles include ETFs, stocks, bonds, and CDs. Fidelity also makes it as easy as possible to perform an IRA rollover from another institution. There are no annual fees and online U.S. equity trades cost just $4.95 each.

Vanguard – Best for experienced investors

A traditional IRA from Vanguard gives you access to more than 100 free mutual funds. For total ease of investment, consider selecting a target retirement fund. Each one is named by the approximate year in which you plan to retire. Rather than charging an annual percentage of your total assets under management, Vanguard charges an annual $20 for each mutual fund or ETF in your portfolio. It is possible, however, to get this fee waived when you sign up for e-delivery service. The fees are also automatically waived when you reach $10,000 in your account. Vanguard does have a relatively steep minimum deposit threshold of $1,000, so it’s not a good option for investors who haven’t already saved up a chunk of cash.

Fundrise – Best for real estate investing

Fundrise is known for opening the doors of commercial real estate to ordinary investors. You can also invest in its eREITS through a tax-advantaged IRA. You’ll pay $75 a year for each eREIT in which you invest, although the total is capped at $125. On top of that, there’s a 0.15% advisory fee and a 0.85% management fee. Fundrise investors can choose between three different plans based on your goals. Supplemental Income is focused on dividends to give you a higher return, Balanced Investing balances dividends with appreciation, while Long-Term Growth lowers your level of dividends to focus on appreciation of your IRA.

What is an IRA?

An IRA, or individual retirement account, is a tax-advantaged investment account designed to help you save for retirement. An IRA is one of the best ways to invest your money to take advantage of tax breaks, whether you receive them upfront (with a traditional IRA) or when you withdraw your money tax-free later in life (as with a Roth IRA). Those tax benefits come with some restrictions, however, and you’ll generally incur a penalty if you withdraw funds from a traditional IRA before you’re 59.5 years old.

How should I choose the right IRA?

When choosing an IRA, you should determine which provider best suits your needs, and then decide whether you’d prefer to open a Roth IRA or a traditional IRA. Roth IRAs are best for young adults without large incomes and those who want the flexibility to take out investments before retirement. Traditional IRAs are best for high earners who want to reduce their taxable income each year, and adults who start an IRA account later in life.

What if I want to switch/rollover my IRA?

Rollovers occur when retirement funds are transferred into a traditional IRA or Roth IRA from another retirement savings account. Most IRA accounts accept rollovers. The most common rollovers are from a 401(k) or a 403(b) workplace retirement plan. You’ll want to do a rollover IRA if you have retirement savings from your previous job. If you have multiple retirement accounts, it also makes sense to consolidate your investment accounts in one place at some point.

The bottom line

It’s never too late to get started by opening a Roth IRA or traditional IRA. Even if you don’t have thousands of dollars each year to invest, anything you put into an IRA account will pay off down the road. The money can compound year after year and to grow into a significant investment. While no investment is guaranteed, IRAs allow you to let your money grow over time.

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