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Best Roth IRA Accounts for 2020
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Making the choice to plan for retirement in 2020 does not have to be complicated or painstaking. By utilizing one of the best IRA options available, investors can easily set themselves and their families up for future financial success. Determining the best IRA for your future should include a thorough look at required account minimums, trading fees, associated management fees and available promotions. All of these factors should be researched and compared against your individual retirement goals.
The 8 best Roth IRA accounts of 2020
- TD Ameritrade Roth IRA: Best for individual management
- Merrill Edge Roth IRA: Best for researching
- Fidelity Roth IRA: Best for mutual funds
- Betterment Roth IRA: Best for managed accounts
- Vanguard Roth IRA: Best for returns
- Charles Schwab IRA: Best for beginners
- Ally IRA: Best for flexibility
- E*TRADE IRA: Best for balance
IRA accounts at a glance
| Provider | Minimum Deposit | Online Trading Fee | Promotion |
|---|---|---|---|
| TD Ameritrade IRA | $0 | $0 on stocks/bonds; $0.65 on options | None |
| Merrill Edge IRA | $0 | $0 on stocks/bonds; $0.65 on options | $100 – $600 |
| Fidelity IRA | $0 | $0 on stocks/bonds; $0.65 on options | None at this time |
| Betterment IRA | $0 for standard; $100,000 for premium | 0.25% – 0.40% management fee | Up to one year of free management |
| Vanguard IRA | $1,000 | $7 – $20 | None at this time |
| Charles Schwab IRA | $0 | $0 online | None at this time |
| Ally IRA | $100 | 0.0% – 0.30% management fee | Up to $3,500 |
| E*TRADE IRA | $0 | $0 on stocks/bonds; $0.65 on options | None at this time |
Best for individual management – TD Ameritrade
One of the biggest names in banking offers Roth IRA accounts with an attractive $0 minimum starting balance.
Investors also get access to more than 4,100 no-transaction-fee mutual funds and $0 online trading fees on stocks and bonds. TD Ameritrade’s Roth IRA is great for beginners because its platform offers a virtual trading simulator where new investors can practice investments before making real-life trades.
Best for researching – Merrill Edge
Similar to other Roth IRA accounts on the list, Merrill Edge offers free stock, bond and ETF trades.
The company offers roughly 2,680 transaction-fee-free mutual funds, a smaller selection than TD Ameritrade’s Roth IRA plan. A big perk of Merrill Edge is investors have access to the company’s private research platform, which additionally includes third-party research from companies like Morningstar and Recognia.
Best for mutual funds – Fidelity
Fidelity matches most other options across the board when it comes to account minimums and fees.
It does fall a little short when it comes to promotions, though, as at the time of our last checking, it was not offering promotions to customers. Fidelity does earn back credit, though, in its low to no-fee mutual fund offerings. The company was the first to bring no expense ratio market index funds to customers.
Best for managed accounts – Betterment
For those looking for a professional helping hand, you may want to consider Betterment Roth IRAs.
The company has two levels to choose from — Betterment Digital, its original offering that comes with no account minimum and a 0.25% management fee. The other option, Betterment Premium, comes with unlimited phone access to certified financial planners but does carry a $100,000 minimum investment and a 0.40% management fee. There is a fee discount available of 0.10% on the portion of your account over $2 million.
Best for returns – Vanguard
Over the past 10 years, 88% of Vanguard’s no-load mutual funds outperformed its respective peer groups.
Those looking to have a professionally managed account will like Vanguard’s options as it has a proven track record and lower fund fees on its mutual funds at an average of around 0.10%. You will need at least $1,000 to get started. Additionally, if you’re an active trader, you may want to look elsewhere as Vanguard IRAs do not have commission-free trading.
Best for beginners – Charles Schwab
If you’re new to retirement savings and are looking for a user-friendly experience, you’ll want to check out Charles Schwab.
The company not only has one of the best mobile apps in the industry, but it also offers fee-free trades, extensive research data and 24/7 support.
Best for promotions – Ally Invest
Those looking for the biggest available promotions available will want to consider Ally as a candidate.
The company is currently offering completely free account management for investors willing to keep 30% or greater of their accounts in cash at all times. While this might not be ideal for some, it could spell significant savings for others, especially those closer to retirement.
Best for balance – E*TRADE
If you’re an investor trying to find a Roth IRA that excels in all categories, E*TRADE is a great fit.
The company has fee-free trades and extensive research tools and access to over 4,400 no-transaction-fee mutual funds. E*Trade is a great all-around pick backed by an industry-standard name.
What is a Roth IRA?
One of the more popular financial tools for retirement planning created in 1997 and named after Senator William Roth of Delaware is the Roth IRA. Much like a traditional IRA, the Roth is a collection of stocks, bonds, ETFs, CD investments, and more bundled into one account used to plan for retirement. Unlike traditional IRA accounts, though, the Roth diverts its tax advantages to retirement by having the investor pay taxes on the investment now. This is ideal for those who are anticipating being in a higher tax bracket later in life. Due to the significant potential tax benefits of an IRA account, the Internal Revenue Services (IRS) has limited the amount of money individuals can contribute annually to their account.
Understanding the difference between Roth IRA and 401k
How should I choose the right Roth IRA?
Choosing the right Roth IRA for you shouldn’t be hard, but it is a significant step in developing your future retirement savings plan. Take the time to weigh what’s most important to you and your family and find the best IRA that links with those goals. Make sure to look at account fees, required minimums, management and trading options and any associated promotions.
Too long, didn’t read?
Making the decision to start saving for retirement as early in life as possible is almost always the smart move. By doing so through tax-advantaged plans like Roth IRAs, investors can better set themselves and their families up for success. Keep in mind that not all IRAs are created equally, and it’s important you take the time to select the best IRA for your unique needs and situation. Any wise investor will tell you there is no time like the present to start saving for the future.
Keep Reading
Methodology
The SimpleScore is a proprietary scoring metric we use to objectively compare products and services at The Simple Dollar.
For every review, our editorial team:
- Identifies five measurable aspects to compare across each brand
- Determines the rating criteria for each aspect score
- Averages the five aspect scores to produce a single SimpleScore
Here’s a breakdown of the five aspect scores and their rating criteria for our review of the best IRAs and Roth IRAs of 2020.
Why do some brands have different SimpleScores on different pages?
To ensure the SimpleScore is as helpful and accurate as possible, we developed unique criteria for every category we compare at The Simple Dollar. Since most brands offer a variety of financial solutions, their products and services will score differently depending on what we’re scoring on a given page.
However, it’s also possible for brands to have multiple SimpleScores. For example, when we apply our methodology to TD Ameritrade’s IRA products, it scores a 4.2 out of 5. However, in our stock trading SimpleScore review, it scores a 3.8 out of 5. While the two products are similar, we created separate rating criteria for the two products based on industry standards.
Questions about our methodology?
Email Hayley Armstrong at hayley@thesimpledollar.com.
Minimum deposit
How much do customers have to deposit when opening an account? We reviewed the minimum deposit requirements for each brand and assigned a score accordingly.
Fee
Many IRA accounts charge a fee, but we scored brands higher if they have low or no fees associated with the account.
Customer satisfaction
We leveraged J.D. Power’s 2020 U.S. Self-Directed Investor Satisfaction Study to rate each brand in customer satisfaction. If the brand was not scored, we simply averaged the other four scores.
Resources
We reviewed the resources available to customers for each brand. Resources such as market insights, instructional blogs, Morningstar reports and more were considered in this metric aspect.
Customer support
When customers need support from the IRA account provider, it’s important that they have options. We reviews brands based on the number of channels of support offered to customers.
