Best Roth IRAs of September 2024
“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.
“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.
BLUEPRINT
Updated 1:12 p.m. UTC June 7, 2024
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The Roth individual retirement account is an essential component of many retirement strategies.
To help you find the best Roth IRA of 2024, our team evaluated nearly 30 firms. We considered the availability of key features such as rollover, inherited and custodial options and assessed the range of investment offerings, quality and breadth of educational resources, caliber of customer service, fee structure, and product breadth.
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Best Roth IRAs
- Fidelity: Best overall.
- Charles Schwab: Best for research and education.
- Interactive Brokers: Best for advanced DIY investors.
- E*TRADE from Morgan Stanley: Best for mobile investors.
- JPMorgan: Best for managed accounts and financial advising.
- Merrill Edge: Best for existing Bank of America customers.
- Vanguard: Best for DIY index fund investors.
- PNC: Best for existing PNC banking customers.
Why trust our investing experts
Our team of experts evaluate leading investing products and analyze a multitude of data points to help you find the best product for your situation. We use a data-driven methodology to determine each rating. Advertisers do not influence our editorial content. You can read more about our methodology below.
- 27 leading financial institutions reviewed.
- 4 levels of fact-checking.
- 70+ data points analyzed.
Fidelity
Charles Schwab
E*TRADE from Morgan Stanley
JPMorgan
Merrill Edge
Vanguard
PNC
Compare the best Roth IRAs
| ROTH IRA | ACCOUNT MINIMUM | OPENING FEE | COMMISSION ON U.S. STOCKS AND ETFS | |||||
|---|---|---|---|---|---|---|---|---|
 Fidelity | $0 | $0 | $0 | |||||
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 Charles Schwab | $0 | $0 | $0 | |||||
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 Interactive Brokers | $0 | $0 | $0 | |||||
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 E*TRADE from Morgan Stanley | $0 | $0 | $0 | |||||
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 JPMorgan | $0 | $0 | $0 | |||||
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 Merrill Edge | $0 | $0 | $0 | |||||
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 Vanguard | $0 | $0 | $0 | |||||
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 PNC | $0 | $0 | $0 | |||||
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Methodology
Our team reviewed and researched some of the largest online brokerages in the U.S. to rank the best in terms of their Roth IRA offerings.
We sent a digital survey to each company reviewed. Our researchers verified the survey data and confirmed any missing data points by contacting each company directly and via online research.
From the 29 brokerages surveyed, we selected the top eight candidates that ranked the highest based on our scoring criteria.
Our methodology comprised the following categories: key features, account types offered, investment types available, educational resources, retirement-specific educational resources, customer service, accessibility, security and customer rating, account and trading fees, company products, and insurance.
Each category was composed of numerous subcategories. For example, the “investment types” category had subcategories corresponding to whether ETFs, mutual funds, Treasurys, bonds, annuities and more were available.
Subcategories were scored based on the data we received and assigned weights, which were aggregated to form the overall scores and weights for each category.
From there, scores were tabulated on a 0.00 to 1.00 scale. The top score of 0.98 was curved up to a 5.00 rating as the highest possible one.
Why other Roth IRAs didn’t make the cut
Our methodology prioritized the range of investment types available, especially given the unique tax treatment of Roth IRAs.
Having an array of investment options is essential for self-directed Roth IRAs. It allows you to diversify your portfolio beyond traditional stocks and bonds. This aids in risk management and can help optimize returns.
The freedom to diversify is especially crucial in a Roth IRA, where post-tax contributions grow tax-free. A well-diversified portfolio can capitalize on this benefit.
Beyond the range of investment types, other significant categories in our evaluation included account and trading fees, customer service, educational resources, and account types. These categories are pivotal for ensuring accessibility and enhancing the quality of your experience.
High fees can erode returns over time, making fee structures a vital consideration. Meanwhile, robust customer service ensures you can navigate your account and address concerns promptly. Educational resources empower you with the knowledge to make informed decisions. Lastly, various account types offer flexibility, catering to different needs and strategies.
Final verdict
Our methodology determined Fidelity is the best provider for Roth IRAs. It earned a top curved score of 5.00.
Fidelity sets itself apart by offering expansive investment options. Its extensive range of in-house products and high assets under management also contributed to its ranking. With hundreds of mutual funds and ETFs, many of which have no transaction fees, Fidelity provides variety and value.
The absence of account minimums, opening fees, ongoing fees, and commissions on stocks and ETFs makes Fidelity an exceptionally affordable option.
Moreover, Fidelity’s dedication to customer service, which is available 24/7 via phone and virtual assistant, plays a crucial role in enhancing the investing experience. This level of support is invaluable for addressing questions and concerns. It also helps ease frustrations that can arise, particularly if you’re new to investing.
Finally, Fidelity’s commitment to education solidifies its top position. The firm offers a comprehensive array of educational resources. These include articles, videos, webinars, online courses, in-house research, third-party research access, newsletters, podcasts and a variety of retirement calculators.
What is a Roth IRA?
A Roth IRA is a unique retirement savings vehicle. It lets you contribute after-tax dollars and enjoy the power of compound returns tax-free.
This unique feature sets it apart from other retirement accounts. When you invest in a Roth IRA, you essentially make a deal with the taxman. You’ve already paid your taxes on your contributions. So your investments grow without the burden of further taxation.
That means you don’t have to pay taxes on investment earnings in a Roth IRA. This can be especially beneficial if you anticipate being in a higher tax bracket in retirement or if tax rates rise.
How does a Roth IRA work?
At its core, a Roth IRA offers flexibility and tax advantages. You can withdraw your contributions anytime tax- and penalty-free.
But your earnings might be subject to taxes or penalties if you withdraw them before age 59½ or before the account has been open for five years.
Another feature of the Roth IRA is its lack of required minimum distributions. Unlike with traditional IRAs, you don’t have to take RMDs. So there’s no age at which you must start withdrawing from your Roth IRA.
This offers a strategic advantage for retirement planning and can be a beneficial estate planning tool.
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Frequently asked questions (FAQs)
Qualifying for a Roth IRA primarily hinges on your modified adjusted gross income.
Specific MAGI thresholds determine whether you can contribute the maximum amount, a reduced amount or nothing at all.
For the 2024 tax year, the contribution limit is $7,000 if you’re under age 50, or $8,000 if you’re 50 or older.
- Single filers. The contribution phaseout range starts at a MAGI of $146,000 and ends at $160,999.99. If you earn $161,000 or more, you can’t contribute to a Roth IRA.
- Joint filers. The contribution phaseout range starts at a MAGI of $230,000 and ends at $239,999.99. If you earn $240,000 or more, you can’t contribute to a Roth IRA.
The earnings potential of a Roth IRA isn’t a fixed number that’s easy to predict. It’s highly variable and depends on several factors.
The returns are primarily contingent on the types of investment assets you own within your Roth IRA. Whether you’re invested in stocks, bonds, mutual funds, ETFs or a combination will significantly influence your returns.
The period you keep your money invested also plays a crucial role. Historically, the longer you remain invested, the more potential there is to average out the highs and lows of the market, which can lead to more consistent and potentially higher returns.
Fees are another factor to consider. High fees can erode your returns over time. So it’s essential to be aware of any charges associated with your Roth IRA and its investments.
Lastly, your behavior as an investor can significantly impact your Roth IRA’s performance. Consistency in investing, such as regularly contributing up to your limit, can harness the power of compound interest.
Moreover, avoiding panic-selling during market downturns, reinvesting dividends and maintaining a long-term perspective can maximize your Roth IRA’s earning potential.
Comparing a Roth IRA to a 401(k) is like comparing apples to oranges. Both have distinct features that cater to different financial needs and objectives. Whether one is “better” than the other largely depends on your time horizon, objectives and tax situation.
A Roth IRA offers tax-free growth and tax-free withdrawals in retirement if certain conditions are met. This can be especially advantageous for those who anticipate being in a higher tax bracket during retirement or believe tax rates will rise.
A traditional 401(k) offers the benefit of tax-deferred growth. Contributions are made with pretax dollars, which can reduce your taxable income in the year of contribution. One of the most compelling features of a 401(k) is the potential for an employer match. If your employer offers a match, it’s essentially “free money” that can boost your retirement savings.
Remember that you might be able to leverage both accounts.
The five-year rule for Roth IRAs determines whether you can withdraw Roth IRA earnings tax-free. Here’s how it works:
- Five-year count. You have to wait at least five after contributing to a Roth IRA to withdraw earnings tax-free. (Remember, though, that you can withdraw your contributions anytime tax- and penalty-free.)
- Age factor. If you’re 59½ or older, you can take out money, including earnings, tax- and penalty-free as long as you’ve met the five-year rule. If you withdraw earnings before age 59½, you might owe taxes and a 10% penalty.
- Exceptions. Even if you haven’t reached age 59½, you might be able to withdraw earnings without penalties (but not always without taxes) if you are buying your first home, are disabled or are the beneficiary of a deceased IRA owner.
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
Blueprint has an advertiser disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.
