The Best Roth IRA Accounts of 2021

·15 min read

The best Roth IRAs let workers save after-tax dollars for retirement without paying exorbitant fees.

They also make it easy for consumers to start investing, thanks to low minimum balance requirements and platforms that make opening an account a breeze.

If you’re thinking of opening a Roth IRA, look for a provider that offers helpful tools, low ongoing costs, and a broad selection of investment options that can help you meet your retirement planning goals.

However, it can be hard to choose a provider when so many companies offer Roth IRA accounts and when they all seem to promise the world.

To make your search easier, we compared the top Roth IRAs available today based on factors such as:

  • investment options

  • educational resources

  • early withdrawal and other fees

  • account minimum investment or balance requirements

Read on to learn more about how we found these providers and which companies made the cut.

The 7 Best Roth IRA Accounts of 2021

The Roth IRA providers we’ve highlighted below stand out from their peers thanks to their low ongoing costs and a broad selection of investment options, as well as the ease with which you can open an account.

  • Fidelity Investments: Best Overall

  • Charles Schwab: Best Investment Options

  • Merrill Edge: Best Bonus Offer

  • E*TRADE: Best for Low Trading Fees

  • Vanguard: Best for Mutual Funds

  • Betterment: Best Robo-Advisor Option

  • Ally Invest: Best by an Online Bank

Below we’ll explain why we chose these seven financial institutions as the best Roth IRA accounts for 2021.

We should also note it’s not recommended to trade actively in retirement accounts.

The following reviews include the most important highlights about each of the top companies, including an overview of their investment options and fee structure.

Fidelity Investments: Best Overall

Fidelity Investments offers a smart Roth IRA option with no annual account fees and no required minimum balance to open an account.

The company also offers tools like an IRA Contribution Calculator and educational resources to help prepare you for retirement. You’ll also get Fidelity’s intuitive online interface that makes it easy to research and track your investments over time.

When it comes to how you can invest your money, Fidelity Investments offers a wide selection of mutual funds, stocks, bonds, exchange-traded funds (ETFs), and certificates of deposit (CDs).

Note that, in addition to not charging annual account fees, Fidelity also offers $0 commissions for online U.S. stock, ETF, and option trades.

These are the main reasons Fidelity earned the top spot on our list as the best overall Roth IRA account. With no minimum balance required to open an account, no annual account fees, and a plethora of low-cost investment options to choose from, Fidelity’s Roth IRA account is hard to beat.

Summary of benefits:

  • No annual account fees to pay

  • No minimum balance requirements to open an account

  • $0 commissions for online U.S. stock, ETF, and options trades

  • A wide selection of mutual funds, stocks, bonds, ETFs, CDs and more

Charles Schwab: Best Investment Options

Charles Schwab is another leading brokerage firm that now makes it easy to open a Roth IRA online. There’s no minimum account deposit required to get started, and you won’t pay any annual account maintenance fees.

You also get access to retirement planning tools and resources, 24/7 phone support, and in-person help at more than 300 Charles Schwab locations nationwide.

One of Charles Schwab’s greatest strengths is in the investment options you can choose from, including mutual funds, stocks, CDs, bonds, and ETFs. Fees are also low for many investment options from Schwab, and you can trade ETFs and stocks online within your Schwab account for free.

Note that you will be charged $5 per automated phone trades and $25 for broker-assisted trades.

2020 was a huge year for Charles Schwab. It finalized its acquisition of TD Ameritrade in October (which is why TD Ameritrade isn’t on this list).

And, Schwab made investing a lot more accessible to small investors with the introduction of Schwab Stock Slices. With this service, you can now invest in some of the largest companies in the U.S. without spending a fortune.

You can buy a fraction, or slice, of any stock in the S&P 500 for as little as $5. Purchase a single slice or as many slices as you want up to a maximum of $50,000 per transaction. You’re not limited to investing in one company either – you can buy slices in a single company or up to 30 different companies each time you buy slices.

Also, there are no commissions when you buy slices online.

Summary of benefits:

  • No minimum balance requirement to open an account

  • No annual account management fees

  • Access to stocks, CDs, bonds, ETFs and more

  • Free ETF trades online within your Schwab account

  • Stock “slices” cost as little as $5.00

  • Merger with TD Ameritrade under way

Merrill Edge: Best Bonus Offer

Merrill Edge is another Roth IRA provider that received high marks in our study thanks to its low fees and investment options. Once you open an account, you can choose from a wide range of stocks, options, bonds, ETFs and well-known mutual funds.

There are no minimum deposit requirements for a self-directed Roth IRA, and you’ll get $0 account fees for online stock and ETF trades. Note that options trades carry a per-contract fee of $0.65.

Additionally, some Merrill Edge self-directed Roth IRA accounts may qualify for anywhere from $100 up to $600 in bonus cash, although the number of rewards you receive will be based on your account balance, starting at a minimum of $20,000.

If you bank with Bank of America, you’ll have a seamless experience adding a Merrill Edge brokerage account and transferring funds up to the IRS’s annual contribution limit.

Summary of benefits:

  • No minimum balance requirements for self-directed Roth IRA accounts

  • A wide range of stocks, options, bonds, ETFs and well-known mutual funds,

  • $0 online equity and ETF trades

  • Up to $600 in bonus cash for opening a Roth IRA account

  • Easy sync with Bank of America accounts

E*TRADE: Best for Low Trading Fees

E*TRADE made our list of best Roth IRA accounts thanks to its low trading fees, which can be especially attractive to active investors.

With a Roth IRA from E*TRADE, you’ll pay $0 commissions for online stock, ETF, and options trades. Fees for mutual funds can vary, but E*TRADE does have access to over 4,500 mutual funds with no loads and no transaction fees. Options start at $0.50 per contract, and futures are $1.50 per contract.

There are no minimum account balances required for this account either, and E*TRADE’s online trading platform makes it easy to access live market data and analysis.

Summary of benefits:

  • No minimum balance requirements

  • $0 commissions for online stock, ETF, and options trades

  • Access to over 4,500 no-load mutual funds with no transaction fees

  • Access to live market data and analysis using E*TRADE’s online platform

  • E*TRADE is now part of Morgan Stanley

Vanguard: Low Expense Ratios

Vanguard offers more than 200 commission-free mutual funds and ETFs to choose from, and with a history of zero to low fees, Vanguard could be the right option for you.

The expense ratios on Vanguard funds are 0.10%, among the lowest in the industry, meaning you’re not going to have high fees eating into your profits. The company’s mutual funds also have no sales loads, no sales commissions, and no account service fees if you choose to receive your account documents electronically.

You can also choose how to pick your investments – you can select targeted funds with a diversity of investments, pick and choose different funds to create a custom portfolio, or get expert help from one of Vanguard’s agents.

You can even import funds from other brokers to make all your accounts easily manageable in one place.

Summary of Benefits:

  • Low expense ratios and fees

  • Large selections of mutual funds, ETFs and other investment options

  • No sales loads or commissions

Betterment: Best Robo-Advisor Option for Beginners

Retirement plans tend to work best when you leave them alone, and robo-advisors excel at passive investing. Opening a Roth IRA through Betterment provides a great way for beginners to start a retirement plan on their own without meeting with a certified financial planner.

You can get start investing on the Betterment app. You’ll need to confirm your identity and answer a few questions so the platform’s algorithms can recommend the right asset allocation and investment selections for you.

Retirement savers can find a lot of robo-advisors with Roth IRAs, but we chose Betterment because, unlike Wealthfront which requires a $500 opening deposit, you can start investing today with any amount.

You’ll also get automatic rebalancing to optimize the growth potential of your retirement savings. Betterment charges an annual fee of 0.25% of your account.

Betterment can also show you your external accounts — bank accounts and other investment accounts, for example — all in one place so you can see where your Roth IRA fits into your larger financial planning goals.

So why not open a Roth IRA with a robo-advisor like Betterment?

The biggest drawback is a lack of investment advice from an in-person financial advisor. You could talk to a human financial advisor with Betterment but you’d pay an additional fee up to $300.

Another drawback for some retirement savers is the reliance on ETFs. Betterment’s portfolios won’t include individual stocks.

Summary of Benefits:

  • 0.25% annual fee easy to understand (pricing increases to 0.4% of account for Premium Account)

  • Intuitive set-up and asset allocation

  • No minimum deposit required to start

  • Betterment now has its own high-yield savings account

  • Can link up to other, external accounts

  • Easy-to-use smartphone app

Ally Invest: Best by an Online Bank

Ally Bank, an all-online bank with historical ties to General Motors, launched Ally Invest back in 2017 after acquiring TradeKing.

Investors can open a Roth IRA with no minimum balance requirement and fund the account easily by linking to any other bank or credit union.

Ally offers commission-free trading on individual stocks and thousands of ETFs. Like many platforms, Ally charges a contract fee for options trading ($0.50 per trade).

Since it’s connected to an online-only bank, Ally Invest excels with its online tools and educational content. In a way, Ally Invest resembles a robo-advisor but it attracts active traders with its easy-to-use interface and wide variety of securities.

You could even trade forex and penny stocks within this account. Some of Ally’s mutual funds do require a transaction fee.

Summary of Benefits:

  • Easy-to-set up and fund online

  • No account minimum deposit to begin

  • Strong educational resources

  • Connected high yield savings account pays high APY

  • Top-notch trading dashboard with real time data

  • Tax benefits easy to track on Ally’s online dashboard

Important Things to Know About the Best Roth IRA Accounts

As you choose where to open your Roth IRA this year, consider these factors:

  • Management fees and expense ratios are often the biggest determinants of your investment returns, since they chip away at your earnings year after year.

  • The best Roth IRA providers typically have a robust online presence, and they should make it easy to open your account online. Many financial companies also have their own mobile apps to help you track your investments no matter where you are.

  • Make sure you’re informed of the income requirements to contribute to a Roth IRA, which we cover in detail below.

  • In 2021, you can contribute up to $6,000 to a Roth IRA, or up to $7,000 per year if you are 50 or older.

  • Both Roth IRAs and Traditional IRAs will provide tax advantages; however, when you get to enjoy those advantages will be different. Be sure to compare both options before deciding which is best for you.

How We Found the Best Roth IRA Accounts

There are numerous financial companies that offer Roth IRA accounts, but they’re not all the same. The providers that made our list came out ahead of the pack based on these important factors:

Low Minimum Deposit Requirements

We chose only Roth IRA accounts with reasonable minimum account opening requirements (or no minimum account balance requirement) for this list. This factor is crucial, since many consumers may not have $1,000 or more to get started and need to invest small sums of money at first.

Accounts with reasonable minimum deposit requirements lower the barrier to entry and make it considerably easier for new investors to get into the game.

Low Fees

We also looked for Roth IRA providers that offered no account management fees, had a good variety of no-load mutual funds and had low expense ratios. These fees can directly chip away at your investment returns without providing you with any real benefit, so you’re better off not paying them for a self-directed account.

Access to Low-Cost Investment Options

All of the Roth IRA accounts that made our list let you choose from a broad range of investment options, many of which can be traded without any fees. We gave preference to providers that offered their own selection of no-fee investment options, whether that includes ETFs, index funds, or mutual funds.

Account Management Options

Finally, we definitely gave preference to Roth IRA accounts that offer helpful online account management options including setting up a rollover into another account if you choose.

This includes not only investing tools and resources, but also access to a mobile app that lets you manage and oversee your personal finance accounts on the go.

A few of the Roth IRA providers on our list also offer local branches where consumers can get in-person help, and we consider that a major plus.

A Better Understanding of Roth IRA Accounts

Unlike tax-deferred retirement accounts like a traditional 401(k) or IRA, a Roth Individual Retirement Account, or simply, Roth IRA account, requires you to contribute after-tax dollars.

While this means you’ll take a tax hit on amounts you invest now, Roth IRA accounts have a trick up their sleeve.

With a Roth IRA, your money will grow tax-free until you’re ready to take distributions after age 59 ½.

Once you do begin taking distributions from your account, you won’t pay income taxes on your withdrawn funds.

For that reason, many consumers who qualify for a Roth IRA account contribute regularly in order to hedge their bets on what their future tax situation may look like.

A Roth IRA account that lets you pay taxes now could be a really good deal later if you believe you’ll be in a higher tax bracket in retirement.

However, it should be noted that you may owe taxes and early withdrawal penalties if you want to takeout earnings before age 59 ½ and before you’ve held the Roth for five years.

You can withdraw your contributions to a Roth at any time and any age, tax and penalty-free; however, you may have to pay taxes and penalties if you want to withdraw any earnings your contributions have made in the stock market — that will depend on how old you are, how old the Roth is, and how you’re using the money.

Another benefit of Roth IRA accounts is that, unlike many traditional retirement accounts that force you to begin taking distributions at age 72, Roth IRAs don’t have required minimum distributions (RMDs) unless you’re not the original account owner.

This means you can leave your money in your account to grow tax-free longer, and perhaps lean more heavily on other retirement accounts you have first.

Roth IRA Contribution and Income Limits

You have to meet specific income requirements to contribute to a Roth IRA, and you’ll also face a maximum contribution limit that varies based on your age.

Roth IRA Contribution Limits

Roth IRA contribution limits are the same for 2021 as they were for 2020, with consumers who earn a taxable income allowed to contribute up to $6,000 across their IRA accounts. For workers ages 50 and older, an additional $1,000 can be contributed for a total of $7,000 per year.

Roth IRA Income Limits

Keep in mind that not everyone can contribute to a Roth IRA — at least not the full amount. In 2021, married couples filing jointly with a modified adjustable gross income (MAGI) below $198,000 can contribute the full amount to a Roth IRA.

For couples with incomes between $198,000 and $207,999, the contribution maximum is lowered, while no contributions are allowed at incomes of $208,000 or above.

Single filers or married couples filing separately with a MAGI below $125,000 can contribute the maximum to a Roth IRA in 2021. For incomes between $125,000 and $139,999, contribution limits are lowered, while no contributions are allowed at incomes of $140,000 and above.

Summary: Best Roth IRA Accounts of 2021

Roth IRA Account

“Best Of” Category

Fidelity Investments

Best Overall

Charles Schwab

Best Investment Options

Merrill Edge

Best Bonus Offer

E*TRADE

Best for Low Trading Fees

Vanguard

Best for Mutual Funds

Betterment

Best Robo-Advisor

Ally Bank

Best from an Online Bank

 

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