The individual retirement account, or IRA, remains a staple of American retirement planning. Unlike employer-sponsored accounts, you fully own and control the account, and it doesn’t change based on your employment.
If you don’t have an IRA yet, don’t worry. Many of the top online brokerages offer low-cost IRAs designed for investors just like you. What follows is a list of the very best.
Best Brokers for IRAs
Not all brokers are created equal. Some offer better selections among investable securities than others. Some charge you a commission for every transaction, while many brokers don’t charge commissions anymore.
And increasingly, some brokers offer excellent robo-advisor services to pick and manage your investments for you.
As you start researching brokers, consider the following as the best in business, although each still comes with its own unique pros and cons.
Best Overall: Vanguard Digital Advisor
Vanguard Digital Advisor is the best platform for IRA investors right now. Its top selling points include:
- $3,000 minimum to invest — that’s far lower than the $50,000 minimum for Vanguard Personal Advisor Services, Vanguard’s lowest-level human-managed service
- Get access to Vanguard’s entire lineup of low-cost mutual funds and ETFs
- Expect a 0.15% average asset management fee that’s waived for the first 90 days
- Pay no more than $2 per $1,000 invested, per year
- Diversified, semi-customized portfolios responsive to your long-term goals and tolerance for investing risk
- Choose from traditional, Roth, and rollover IRAs
Best Robo-Advisor: Wealthfront
Wealthfront is the best robo-advisor for IRA investors — other than Vanguard Digital Advisor. It has a low flat management fee (0.25% AUM, regardless of balance), uses very low-cost funds to craft diversified portfolios for the long haul, and has a strong lineup of financial planning tools that could potentially replace your human financial advisor (if you have one).
- Opt for people- and planet-friendly investments with the Socially Responsible Portfolio
- Hold day-to-day funds in the Wealthfront Cash Account — no account fees and 4.80% APY on all balances
- Periodic, fully automated portfolio rebalancing
- Choose from traditional, Roth, SEP, and rollover IRAs
Best for Low Overall Cost: SoFi Invest
SoFi Invest keeps overall costs low enough to qualify as the best IRA brokerage for budget-conscious investors. That’s down to:
- No commissions for self-directed trades
- No management fees for robo-advisor service
- No charge for access to human investment advisors
- A strong inventory of low-cost ETFs
- Fractional share investing, which reduces your trades’ opportunity cost
Best for Self-Directed Investors: Ally Invest
Ally Invest offers both an active trading option and an automated robo-advisor option. It doesn’t charge for either. But the active trading option is where it really shines, thanks to:
- No minimum opening investment
- Account opening bonus worth up to $3,000, depending on opening deposit
- Low-cost ETFs from Vanguard, GlobalX, iShares, and more
- Excellent research and trading tools, such as probability calculators
- Access to alternative investments like options, futures, and forex
- No commissions on stock or ETF trades
Best for Socially Conscious Investors: Betterment
Betterment has a lot going for it, from reasonable management fees ($4 per month or 0.25% to 0.40% AUM, depending on your balance and plan) and value-adds like a high-yield cash management account. But it really shines for socially conscious investors thanks to three SRI portfolios:
- Climate Impact, supporting companies that lower carbon emissions and invest in low-carbon projects
- Social Impact, supporting companies working to improve gender diversity and racial equity
- Broad Impact, supporting companies working toward lower carbon emissions, ethical labor management, and board diversity
Most competing robo-advisors, it should be noted, offer one SRI portfolio option at most.
Best for Fee-Free Funds: Fidelity Investments
Fidelity Investments is the best IRA brokerage for investors seeking truly fee-free investment vehicles. It even beats out Vanguard, which usually leads the low-cost conversation.
The secret lies in fee-free mutual funds like Fidelity® ZERO Large Cap Index Fund (FNILX) and Fidelity® ZERO Total Market Index Fund (FZROX). Unlike competitor funds that have low but nonzero expenses, Fidelity ZERO funds do away with fees entirely. Over the typical retirement investor’s investing time horizon, those savings can really add up.
- Choose from thousands of transaction-fee-free mutual funds
- Get access to proprietary research from more than 20 third-party suppliers, including Recognia, Ned Davis, Thomson Reuters, and McLean Capital Management
- Stick with self-directed trading or choose from two robo-advisor options: Fidelity Go® ($3/mo for balances under $50k, then 0.35% AUM with no account minimum) or Fidelity® Personalized Planning & Advice (0.50% AUM with a $25k account minimum)
Best for Preferred Customer Relationships: Merrill Edge
Merrill Edge is a separately branded but fully integrated arm of Bank of America, and it shows. You can see your BofA and Merrill balances in a single dashboard and instantly transfer funds between the two institutions — putting your cash to work in the market faster or accessing IRA withdrawals or distributions at the drop of a hat.
Plus, qualifying Merrill balances count toward your status in BofA’s Preferred Rewards program. Climb all the way to Platinum Honors status ($100k+ three-month average combined daily balance) to get perks like:
- A 0.15% reduction in your Merrill Guided Investing management fee
- 75% bonus on applicable Bank of America credit card rewards
- 0.50% discount on auto loan rates
- $600 off your mortgage origination fee
- Get up to $600 when you open a new Merrill Edge IRA with a qualifying deposit
- Choose from traditional, Roth, rollover, and SEP IRAs
- Pay no commission on stock, ETF, or options trades (options contract fees may apply)
- Use Idea Builder to generate actionable trading and portfolio-building ideas
- Find thousands of mutual funds with no transaction fees
Best for Smaller Balances: Acorns
Simply create an online checking account with Acorns, complete with a debit card. Every time you spend money on the card, Acorns rounds the purchase up and transfers the difference to your robo-advisor account. It then invests those funds per your stated preferences.
- Pay a flat $3/mo, regardless of balance
- Choose from prebuilt portfolios in line with your investment goals
- Get paid up to 2 days early with qualifying direct deposit into Acorns Checking
Best for Women Investors: Ellevest
Ellevest is the best IRA brokerage for women investors, bar none. That’s due to features and capabilities like:
- Access to career coaching experts on a discounted hourly fee basis
- Access to human financial planners attuned to its customers’ unique planning needs
- Comprehensive investment guidance for employer-sponsored accounts like 401(k)s and SIMPLE IRAs
- Support for employer-sponsored account rollovers
Ellevest makes IRAs available to members of its middle tier, which costs $5/mo regardless of balance.
Methodology: How We Select the Best Places to Open an IRA
We use 8 key metrics to evaluate the top brokerages for IRAs. As you learn more about IRA platforms and figure out what you want in a broker, refer back to this list of factors to see how each stacks up.
Fund Fees and Expenses
Fund management expenses are unavoidable in any IRA that contains ETFs or mutual funds. But some IRAs do a really good job of controlling them by limiting passively managed investments to very low-cost funds offered by high-quality, low-expense providers like Vanguard, Fidelity, and Schwab.
Asset Management Fees
Investments managed by human advisors or robo-advisors inevitably incur management fees on top of them fund fees and expenses.
But there’s a big difference between high- and low-cost IRAs. High investment management fees act as a drag on asset growth, reducing net gains and leaving you with less money when you’re ready to retire. We prefer brokerages that keep management fees in check for clients who prefer passive management and don’t want to pay too much for it.
Investing Style and Approach
The main split here is between managed investing and self-directed investing. On the managed investing side, the difference between passive management and active management is important as well.
The former uses a mix of index and sector funds to achieve diversification and meet investors’ objectives but doesn’t claim to offer market-beating performance. The latter does aim to beat the market but generally incurs higher costs and greater risk in the process.
The difference between robo-advisors, human financial advisors, and hybrid management is important to understand as well. Increasingly, brokerages offer low- or no-cost robo-advisors for entry-level investors and add a human touch — the hybrid model, where day-to-day investment decisions run on algorithms but clients can get in touch with human advisors when needed — for investors with higher account balances and a tolerance for higher fees.
Virtually all IRA brokerages offer access to securities like ETFs and mutual funds. Most make stocks available as well.
From there, the picture gets muddier. Full-service brokerages like Schwab and TD Ameritrade offer access to a wide array of exchange-traded securities and fixed-income instruments, and some offer access to nontraditional instruments like foreign currencies (forex) and cryptocurrencies as well.
Meanwhile, specialized alternative investment platforms like Fundrise may focus entirely on instruments that aren’t traded on stock exchanges. In Fundrise’s case, that’s real estate. Sophisticated investors appreciate the opportunity to hold real estate and other less-liquid alternative assets in tax-advantaged IRAs, but that’s not appropriate for the average retirement saver.
Investing Minimums and Relationship Tiers
Most brokerages have low or no minimums to open an account. But you might need to clear a certain balance threshold to qualify for managed investments or gain access to specific services, like one-on-one financial planning support.
For example, Schwab’s robo-advisor service requires a minimum investment of at least $5,000. Not everyone has $5,000 ready to invest, and even those who do may prefer to ease their way into letting a robo-advisor manage their money.
Meanwhile, Personal Capital’s hybrid investment management platform requires a minimum investment of $100,000, putting it well out of reach of people just starting down the road to retirement. On the other hand, if you do have that kind of money, you’ll appreciate Personal Capital’s reasonably priced financial planning and wealth management package.
Accessibility for Beginners and Lower Net Worth Investors
Some brokerages make it easier than others for investing beginners and lower-net-worth investors to open, fund, and grow their IRAs.
Some make it really easy. Our top pick for investors with smaller account balances is Acorns, one of the few platforms with a round-up investment feature that literally puts spare change to work in the market. Plenty more platforms welcome novices with low or no minimum investment requirements and fractional share purchases.
Socially Conscious Investing Options
As equitable corporate governance and environmentally friendly business practices go mainstream, socially conscious investing (also known as socially responsible investing or ESG investing) is increasingly indistinguishable from “traditional” investing.
Still, some brokerages are farther ahead of the curve than others. The best, like Betterment, offer multiple SRI investing options for IRA customers. When you choose one of these options, you gain the assurance that your money won’t fund enterprises that don’t meet clear, rigorous ESG standards, like fossil fuel companies.
Brokerages’ financial planning resources range from thin and entirely self-directed to comprehensive and entirely hands-on. If your preferred brokerage doesn’t have a team of in-house planners ready to answer your planning questions, look for tools that you can use at your own pace, like:
- Retirement planning and income calculators
- A personal risk tolerance questionnaire
- A financial goal calculator
- A future net worth calculator
Depending on your financial situation, these tools may replicate the services of a human financial advisor. That could save you a significant amount of money upfront if you’re able to forgo a human-led financial planning project, and even more in the long run if you’re comfortable using a low-cost robo-advisor or self-directing your investments.
Become an IRA Expert: Your IRA Questions Answered
You have questions about IRAs. We have answers.
What Are the Tax Advantages of IRAs?
This depends on whether you open a traditional or Roth IRA. With a traditional IRA, you get to deduct the contributions from your taxable income, so you get an immediate tax break. But you still have to pay income taxes on the withdrawals in retirement.
Roth IRAs work in the exact opposite way. You still pay income taxes this year on the money you contribute, but the money in your Roth IRA grows and compounds tax-free, and you don’t have to pay any taxes on withdrawals in retirement.
How Much Can You Contribute to an IRA?
You can’t just contribute whatever you want to an IRA. The IRS limits how much you can contribute each year. In 2022, you can contribute up to $6,000, or $7,000 if you’re over 50, to a traditional or Roth IRA.
Over a certain income level, the ability to contribute phases out. For traditional IRAs, single filers lose the ability to contribute between incomes of $65,000 and $75,000 if they also have access to an employer-sponsored retirement plan. Likewise, married couples filing jointly lose the ability between incomes of $104,000 to $124,000 if covered with a work plan.
For Roth IRAs, you start losing the ability to contribute at $124,000 ($196,000 for married couples filing jointly), and it disappears entirely at $139,000 in modified adjusted gross income ($206,000 for married couples).
Contribution rules are different for other types of IRAs. For example, a couple under 50 can contribute up to $12,000 to a spousal IRA, or $13,000 if one member is over 50 and $14,000 if both members are over 50. The contribution limit for SEP IRAs is much higher: $61,000 total, including employer and employee contributions.
Why Should You Have an IRA?
The difference between an IRA and a regular brokerage account lies in the tax advantages explained above — and the age restriction on withdrawing money, which is often cited as a negative. You can’t withdraw money from an IRA until age 59 1/2, or the IRS hits you with a 10% penalty plus regular income taxes on the withdrawal.
How Do You Roll Over a 401(k) Into an IRA?
If you change jobs or no longer want to use your current employer’s plan custodian, you may wish to “roll over” your 401(k) or other employer-sponsored retirement plan into an IRA. This sounds scary, but it’s pretty straightforward, and your plan custodian is legally required to cooperate.
Although it can vary on a case-by-case basis, the rollover process generally goes like this:
- Open a new rollover IRA account with one of the brokers on this list
- Contact your current 401(k) custodian to initiate the rollover process
- Fill out the paperwork required to make the rollover official
- Arrange for the transfer of assets or funds — your old custodian may send you a check that you need to deposit into your new account
- Start investing in your new rollover IRA
Fun Facts About IRAs
- The first IRAs hit the market in 1975. Back then, the annual contribution limit was $1,500, and it remained at or below $2,000 until 2001.
- The total value of assets held in IRAs exceeded $13 trillion in the second quarter of 2021.
- You can contribute to an IRA for the “current” tax year all the way up to the tax filing deadline. So, you can make contributions for the 2022 tax year as late as April 15, 2022.
- The Roth IRA wasn’t a thing until 1997 and didn’t become popular until the next decade, when a long bull market made the appeal of tax-free growth clear.