Charles Schwab is, like Fidelity, a great option for just about anyone’s Roth IRA. If you need some hand-holding, it’s there for you (e.g., a tool that helps you figure out which retirement plan is best for you), there’s great research for DIY investors to explore, and anyone with their eyes on the retirement prize can benefit from using Schwab’s excellent planning tools. And if you’re eager to actively trade in your Roth IRA, Schwab provides the tools to make that easy and possibly even fun.
One thing I don’t like about Schwab is the $74.95 transaction fee to buy some mutual funds, e.g., Vanguard or Fidelity mutual funds. That’s one hefty fee. Still, ETFs come with a $0 trading fee; same with any of Schwab’s no-transaction-fee mutual funds. Read review.
» If you’re an active trader, read our Charles Schwab review on StockBrokers.com for a full rundown of the broker’s trading tools.
E*TRADE’s roots are in the world of active trading (notice the all-caps “TRADE” in the name?), so if that’s your jam, then opening a Roth IRA at this broker is going to feel like coming home. Or, if you’re more in the “I’d like to give trading a try” stage, then E*TRADE’s paper trading tool will let you explore to your heart’s content. But when it comes to IRAs, what really stands out are E*TRADE’s top-notch retirement planning tools, including an excellent calculator, and its Complete IRA — an account designed to streamline retirement withdrawals.
Now, if you’re a young saver just starting out on your retirement journey, then E*TRADE’s Complete IRA isn’t (yet) for you. It’s only available to people 59½ or older, which is when you can start taking penalty-free IRA withdrawals. But this journey is all about long-term goals, right? And I’m pretty sure your future self will love the Complete IRA’s convenient IRA withdrawal options, with a debit card or electronic payments, and its auto-generated tax forms for your requisite IRA report for the IRS. Read review.
Interactive Brokers (aka IBKR) started out focused on professional-level active trading, and its comprehensive investing tools and platforms are a sign of that history. More recently, the company has been taking steps to welcome less experienced investors, too. Just one example: Interactive Broker’s Client Portal is a simplified web interface for anyone to use. Plus, IBKR’s Roth IRA account and trading fees are some of the lowest among all major brokers, and their retirement calculator is powerful.
Plus, Interactive Brokers offers a cool — and low-cost — automated investing product, aka robo advisor, through its Interactive Advisors affiliate. The account minimum is just $100, and the management fee is an ultralow 0.20%. You’ll get a diversified portfolio, complete with inflation hedging strategies, and you can customize that portfolio, to some degree, if you’d like to have your investing dollars more focused on, say, eco-friendly companies. Read review.
FAQs
What is a Roth IRA?
A Roth IRA is a tax-advantaged retirement account. When you open a Roth IRA and contribute money to it, the money in that account grows tax-free (assuming you follow all the rules). After you turn 59½, you can withdraw your money, including any investment gains, without owing any taxes. That’s a sweet and valuable perk once you’re in retirement.
Oh, by the way? If you’ve got many years until retirement, be sure to invest the money in your Roth IRA in a diversified portfolio of stocks and bonds. Here’s more on what an IRA is, how to open a Roth IRA, and how to invest for retirement.
What is the 2024 contribution limit for a Roth IRA?
The 2024 IRA contribution limit is $7,000 if you’re under age 50, and $8,000 for those 50 and older. The limit is set by the IRS and applies to the total annual amount of new money an investor is allowed to contribute to traditional and Roth IRAs at any broker. If you invest in both a traditional and a Roth IRA in the same year, the total of your combined contributions still may not exceed that $7,000/$8,000 limit. (IRA rollovers and IRA-to-Roth conversions aren’t subject to these contribution limits.) See “What is an IRA?” for more on IRA contribution and withdrawal rules for 2024.
What are the advantages of a Roth IRA vs. a traditional IRA?
The big advantage of a Roth IRA over a traditional IRA is that once you retire, all of your money, including your investment earnings, comes out tax-free. That’s a nice perk when you’re on a limited income in retirement and hoping to keep as much as your savings for yourself, rather than handing it over to the IRS.
Two other Roth IRA advantages:
- If you run into a money emergency, you can always withdraw your contributions at any time, no taxes or penalties (with a traditional IRA, early withdrawals generally come with income tax plus a 10% penalty).
- There are no required minimum distributions, so you can choose when to withdraw from your Roth, unlike a traditional IRA, from which you’re required to take distributions once you reach age 73.
But hold on. The traditional IRA has its own advantages: The money you put into a traditional IRA is pre-tax (if you qualify for deductible contributions). Put another way, your traditional IRA contributions reduce your taxable income in the year you make the contribution. That can help boost how much you save. (In retirement, you pay income tax on the money you withdraw from your IRA.)
Plus, your investments grow tax-deferred — no tax due till you withdraw the money — and if your tax rate is higher now than it will be in retirement, then avoiding tax on your contribution dollars now, with a traditional IRA, will lower your lifetime tax bill.
If you’re having trouble picking between a Roth IRA and a traditional IRA, you could always choose to contribute to both. Just remember that the annual maximum you can put in both accounts put together is $7,000 in 2024, or $8,000 if you’re 50+.
Read more about Roth IRAs vs. traditional IRAs, including contribution limits and eligibility rules.
Are Roth IRA contributions tax deductible?
Roth IRA contributions are not tax deductible. The money you contribute to a Roth is money that will be counted as part of your income in the year you make the contribution. That is, you earn your money for the year and report it, as usual, on your tax return. Meanwhile, you make your Roth IRA contribution(s), without any tax effect.
The beauty of a Roth is that, once you put your money in, and assuming you let it grow till you’re at least 59½ years old, then all of your money comes out entirely tax-free, including whatever investment returns you earned in the account. That’s pretty sweet.
When can you withdraw from a Roth IRA?
You can withdraw your Roth IRA contributions any time you want, no penalty, no taxes. Say you contributed money to a Roth IRA yesterday? That money you contributed can be taken out of your account today, without taxes or penalty.
The sticky part is if you want to withdraw your investment earnings. That money will be subject to income taxes and a 10% early withdrawal penalty if you take it out before you’re age 59½. There are some exceptions to the penalty — check out the Roth IRA early withdrawal exceptions on IRS.gov.
Can you have multiple Roth IRAs?
Yes, you can have multiple Roth IRAs. Just know that the annual contribution maximum (which is $7,000 in 2024, plus an extra $1,000 if you’re 50 or older), applies to your contributions to all Roth accounts, totaled up. You can contribute that annual maximum spread out across one Roth or three or 100, but don’t exceed that dollar cap.
Keep in mind that the annual maximum dollar amount applies to money you’re contributing to a Roth IRA. If you’re rolling money into an IRA, or converting a traditional IRA to a Roth IRA, the annual maximum contribution amount doesn’t apply.
Can you have a Roth IRA and a 401(k)?
Yes, you absolutely can (dare I say, should?) have a Roth IRA and a 401(k). There’s no limitation on having both. You can contribute the maximum amount to a 401(k), aka $23,000 in 2024, plus an additional $7,500 if you’re 50+, and at the same time you can contribute the maximum to a Roth IRA, i.e., $7,000 in 2024, plus an extra $1,000 if you’re 50+.
Even if your 401(k) offers a Roth option, you can contribute the maximum 401(k) amount to that Roth option, and contribute the maximum to your Roth IRA.
Our Research
Why you should trust us
Andrea Coombes, a senior writer for investor.com, has more than 20 years of experience researching, writing and teaching about personal finance, with a focus on retirement planning. She manages her own retirement portfolio (a couple of 401(k)s, a rollover IRA, Roth IRA, SEP IRA, HSA and brokerage account), with the bulk of her retirement assets focused on the Lazy Portfolio strategy for retirement investing. A former financial coach, she is studying for the Certified Financial Planner™ credential, one of the most stringent certifications for financial professionals.
Blain Reinkensmeyer, co-founder of investor.com and head of research at fellow site StockBrokers.com, has been investing and trading for over 25 years. After having placed over 2,000 trades in his late teens and early 20s, he became one of the first in digital media to review online brokerages. Blain created the original scoring rubrics for investor.com and oversees all testing and rating methodologies.
For this guide:
- We used our own brokerage accounts for testing.
- We collected multiple data points for each broker.
- We tested each online broker's website and mobile app, where applicable.
- We maintained strict editorial independence; brokers cannot pay for inclusion or a higher rating.
How we tested
Our research team meticulously collected data on features with particular importance to those saving for retirement, such as trading costs, management fees, availability of fee-free funds, ease of website and app use, and retirement planning tools and resources. All research, writing and data collection at investor.com is done by humans, for humans. Read our generative AI policy here.
Investor.com uses a variety of computing devices to evaluate platforms and tools. Our reviews and data collection were conducted using the following devices: iPhone SE running iOS 17.5.1, MacBook Pro M1 with 8 GB RAM running the current MacOS, and a Dell Vostro 5402 laptop i5 with 8 GB RAM running Windows 11 Pro.
Each broker was evaluated and scored in seven key categories: retirement account types, IRA fees, self-directed investment options, managed investment options, retirement planning tools, rollover experience, and ease of use.
Trading platforms tested
For this guide, we tested the following online brokers:
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About the Editorial Team
Andrea Coombes
Andrea Coombes has 20+ years of experience helping people reach their financial goals. Her personal finance articles have appeared in the Wall Street Journal, USA Today, MarketWatch, Forbes, and other publications, and she's shared her expertise on CBS, NPR, "Marketplace," and more. She's been a financial coach and certified consumer credit counselor, and is working on becoming a Certified Financial Planner. She knows that owning pets isn't necessarily the best financial decision; her dog and two cats would argue this point.
Dayana Yochim
Dayana Yochim has been writing (articles, books, podcasts, stirring speeches) about personal finance and investing for more than two decades, focusing on bringing clarity and the occasional comedic aside to what is often a murky, humorless topic. She’s written for NerdWallet, The Motley Fool, HerMoney.com, Woman’s Day, Forbes, Newsweek and others, and been a guest expert on "Today," "Good Morning America," CNN, NPR and wherever they’ll hand her a mic.
Carolyn Kimball
Carolyn Kimball is Managing Editor for Reink Media Group and the lead editor for content on investor.com. Carolyn has more than 20 years of writing and editing experience at major media outlets including NerdWallet, the Los Angeles Times and the San Jose Mercury News. She specializes in coverage of personal financial products and services, wielding her editing skills to clarify complex (some might say befuddling) topics to help consumers make informed decisions about their money.
Blain Reinkensmeyer
Blain Reinkensmeyer has 20 years of trading experience with over 2,500 trades placed during that time. He heads research for all U.S.-based brokerages on StockBrokers.com and is respected by executives as the leading expert covering the online broker industry. Blain’s insights have been featured in the New York Times, Wall Street Journal, Forbes, and the Chicago Tribune, among other media outlets.
