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Imagine having access to tax-free money in retirement. No worrying about the IRS penalizing you for drawing down your balance, and no concerns about underpaying Uncle Sam.

Sounds like a dream, but it’s very much a reality. All you have to do is open and contribute to a Roth IRA account.

With a Roth IRA, you contribute post-tax money. Since you’ve already paid taxes on contributions, those contributions can potentially grow tax-free, depending on market conditions and your investment choices, of course. You also won’t need to pay taxes on withdrawals from your Roth IRA in retirement.

Opening a Roth IRA can be a great strategy if you’re looking for ways to lower your tax burden when you retire. But there’s no shortage of brokerages offering these types of accounts. So if you’re thinking about opening a new Roth IRA account, here are my top picks for the best options available.

Related: Best Investments for Roth IRA Accounts

Best Places to Open a Roth IRA—Our Top Picks


Top Low-Cost Roth IRA
A Roth IRA With Matching Funds
Robo-Advisor Roth IRA
4.6
4.3
4.1
Fidelity Roth IRA: No annual, opening, or closing fees. Fidelity Go Roth IRA: 0.35% annual fee.
No annual, opening, or closing fees. Robinhood Gold: Free 30-day trial, then $5/mo.
No annual or opening fees. $100 closing fee. M1 Plus: $10/mo. or $95/yr.
Top Low-Cost Roth IRA
4.6
Fidelity Roth IRA: No annual, opening, or closing fees. Fidelity Go Roth IRA: 0.35% annual fee.
A Roth IRA With Matching Funds
4.3
No annual, opening, or closing fees. Robinhood Gold: Free 30-day trial, then $5/mo.
Robo-Advisor Roth IRA
4.1
No annual or opening fees. $100 closing fee. M1 Plus: $10/mo. or $95/yr.

Best Roth IRA Accounts

1. Fidelity Investments (Best IRA Account for Retirement Savings)


fidelity roth ira signup

  • Account minimum: None
  • Minimum initial deposit: None
  • Fees: Fidelity Roth IRA: No annual, opening, or closing fees; Fidelity Go Roth IRA: 0.35% annual fee

Fidelity offers two Roth IRA options: the Fidelity Roth IRA and Fidelity Go Roth IRA.

The Fidelity Roth IRA likely makes more sense for self-directed investors. It lets you pick and choose your investments, and you won’t be subject to advisory fees. Further, a Fidelity Roth IRA isn’t subject to account minimums, has extremely minimal fees, and offers commission-free trades. While you can expect no opening fees, closing fees, or annual fees with a Fidelity Roth IRA, you might pay mutual fund fees and fees for other managed accounts—however, these are fairly standard costs no matter which provider you choose.

Assets offered include individual securities, such as stocks, bonds, certificates of deposit (CDs), annuities, exchange-traded funds (ETFs), or mutual funds, which include the Fidelity Freedom target-date retirement funds series. Options trades are also available in a Fidelity Roth IRA, but the strategies accessible in the account are generally limited to options Tier 1 with the addition of spreads (up to four legs). This is very common for IRAs.

Those who prefer to be less hands-on with their investments will likely appreciate the Fidelity Go Roth IRA. With this digital account, Fidelity selects investments based on your risk tolerance and goals.

Because this is a managed account, you’ll pay annual advisory fees of 0.35% of assets under management once your balance exceeds $25,000. This figure compares favorably to competitors like Betterment that charge more for similar services. In exchange for those fees, you’ll get unlimited one-on-one coaching calls with a dedicated team of Fidelity advisors.

Also helping you save: The Fidelity Go Roth IRA account only invests in the Fidelity Flex series of mutual funds, which charge no management fees and (with few exceptions) fund expenses.

Depending on your personal needs, either account offers a compelling set of features and costs. Fidelity’s Roth IRA lineup is an inexpensive, highly functional, and flexible retirement account, and thus a Roth IRA account worth considering. Open your account today.

Related: Beginner’s Guide to Fidelity Target-Date Funds

2. SoFi Invest (Best for People With Other SoFi Financial Products)


sofi roth ira signup

  • Account minimum: None
  • Minimum initial deposit: None
  • Fees: No annual or opening fees; $20 closing fee

SoFi offers many perks to its customers, including no annual or opening fees on many different account types. Its SoFi Invest Roth IRA could be a good choice if you’re an existing SoFi customer.

SoFi offers two options catering to different investment styles. Its active investing option lets you choose and manage your own investments. And with its automated investing option, SoFi will select and manage investments on your behalf.

You won’t pay management fees with either account option, and SoFi doesn’t charge commissions for stock or ETF trading. Several other investment choices are also available, including options and margin trading. However, underlying fund fees may apply depending on the investments you choose, and you will have to pay a modest $20 fee to close your account.

As a platform: SoFi’s interface is still very much geared toward younger, less experienced investors—everything is focused on simplicity and ease of use, rather than an expanse of sophisticated tools. SoFi also offers budget-friendly features such as fractional shares, which allow you to invest for as little as $1.

Related: How Much Should I Contribute to My 401(k)?

3. M1 Finance (Best Customizable Robo-Advisor)


m1 finance roth ira signup

  • Account minimum: None
  • Minimum initial deposit: $500
  • Fees: No annual or opening fees; $100 closing fee

Investors who enjoy the convenience of automated investing but also want the option to customize their portfolios may appreciate a Roth IRA from M1 Finance. Based on our extensive review of the best Roth IRA accounts, we consider M1 Finance to be a suitable choice to someone who wants the benefits of a robo-advisor but with the self-directed drive to pick their own investments.

For those wanting the former, this financial services company offers pre-built portfolios called “Expert Pies,” and each pie is customized based on various investment goals. For example, you can build a traditional portfolio of stocks and ETFs, or an age-suitable retirement portfolio through target-date fund-style investments. There’s even an Expert Pie geared toward responsible investing.

And if you’d like to tweak their collection of portfolios or even select some of your own investments to add to your portfolio? You can choose the pies you like most and customize as you see fit.

In our review of Roth IRA accounts, we’ve found many robo-advisors who offer pre-built portfolios, but not many who offer an additional option to customize investments like M1 Finance.

When you open an account with M1 Finance, you also won’t pay any management fees, though a minimum deposit of $500 does apply for new Roth IRA accounts. It also has a high $100 closing fee and $100 account transfer fee. (So, if you were to transfer your Roth IRA to a different provider, you would actually be subject to both fees for a total of $200.)

Read more in our M1 Finance Roth IRA review.

Related: 9 Best Robo-Advisors for Investing Money Automatically

4. Betterment (Best ETF-Based Robo-Advisor With Human Advisors)


betterment roth ira signup

  • Account minimum: None
  • Minimum initial deposit: $10
  • Fees: $4/mo. or 0.25% annually

Investing in ETFs can be a smart way to diversify your portfolio, and Betterment’s Roth IRA is an ideal vehicle for ETF investments as that’s the only option available in the account. Betterment offers several low-cost ETFs from major fund providers that align with different themes and investments. If you’d like to invest in socially responsible companies, for example, you might choose to buy shares of its Broad Impact ETF, which focuses on companies highly ranked for environmental, social, and governance.

Keep in mind that Betterment is primarily a robo-advisor, so if you prefer to be hands-on with your investments, it might not be the best choice. That said, you can connect with human advisors to get guidance on your account. The option to talk with a financial professional makes Betterment fairly unique among robo-advisors.

Betterment charges an annual fee of 0.25% or a monthly fee of $4. You can upgrade to Betterment Premium for an additional 0.15% add-on fee to receive on-demand support from a Certified Financial Planner™. Upgrading requires a $100,000 minimum balance required in cash, stocks, bonds, or crypto holdings.

Related: The 7 Best Dividend ETFs [Get Income + Diversify]

5. Robinhood (Best Roth IRA for Deposit Bonus)


robinhood roth ira signup

  • Account minimum: None
  • Minimum initial deposit: None
  • Fees: No annual, opening, or closing fees

Robinhood is a pioneer of commission-free trading, jumping into the investing public’s consciousness in 2013 when they rolled out commission-free trading. They remain a standout option for cost-minded investors thanks to their continued $0 commissions on stocks, ETFs, and options, as well as for its fractional trading, which allows people to invest with as little as $1.

More importantly, though, Robinhood has evolved from a bare-bones app appealing to mostly beginner investors to a fuller-featured account suitable for a wider range of experience levels.

For instance, Robinhood now offers individual retirement accounts (IRAs) and Roth IRAs via Robinhood Retirement. Functionally, it comes up short compared to many other IRA providers because of its investment options. It offers just stocks and ETFs; like with its brokerage account, mutual funds aren’t available. Options aren’t currently available, though Robinhood has explicitly stated that options will be made available soon.

However, Robinhood Retirement still stands out from the pack because it’s the only IRA provider that offers matching funds. If you open up an IRA with Robinhood Retirement, Robinhood will match 1% of any IRA transfers, 401(k) rollovers, and annual contributions to your account—and 3% if you pay for the Robinhood Gold service ($5 per month)—typically almost immediately after you make your contribution. Better still: Any matches made on annual contributions don’t count toward your contribution limit. You can choose your IRA investments yourself, but Robinhood’s Portfolio Builder can also provide you with a custom recommended portfolio made up of five to eight ETFs.

Sign up for a Robinhood Roth IRA today.

Related: 11 Best Stock Portfolio Tracking Apps [Stock Portfolio Trackers]

6. E*Trade (Best IRA Account for No-Load Mutual Funds)


etrade roth ira signup

  • Account minimum: None
  • Minimum initial deposit: None
  • Fees: No annual, opening, or closing fees

E*Trade from Morgan Stanley is a low-cost online brokerage featuring an array of investment choices. And if you’d like to invest in no-load mutual funds, its Roth IRA could be a good choice. E*Trade offers a wide selection of around 6,500 mutual funds, many of which have no load or transaction fees.

For self-directed investors, E*Trade offers the option to choose and manage your own Roth IRA investments. In addition to mutual funds, you can invest in stocks, ETFs, bonds, CDs, options, futures, limited margin, and more. And if you prefer to be less hands-on, you can also get access to a managed portfolio for as little as $1.50 or 0.30% each year. But there’s an initial $500 deposit requirement.

Overall, a Roth IRA from E*Trade is a contender if you’re seeking a low-cost investment platform that lets you invest in mutual funds without a large sum of money or have interest in using limited margin or accessing futures in your account.

Related: 11 Best CD Alternatives to Capture Interest With Low Risk

7. Vanguard (Best Robo-Advisor Service With Fiduciary Advisors)


vanguard roth ira signup

  • Account minimum: None
  • Minimum initial deposit: $0
  • Fees: $25 annual fee, no opening or closing fees

If you have an existing Roth IRA or employer-sponsored account with a large balance, you might consider rolling over that amount into a Vanguard IRA.

A Vanguard Roth IRA offers access to commission-free trades of individual stocks and ETFs plus the ability to trade more than 3,000 no-transaction-fee mutual funds. And while that’s a sizable universe of mutual funds that come without transaction fees, the company also has mutual funds that fall outside this group, with transaction fees ranging from $8 to $50 per trade. And while there aren’t any account minimums to open a Roth IRA with Vanguard, most Vanguard mutual funds carry minimum investment requirements, often starting at $1,000 at Vanguard. Individual stocks and ETFs only cost whatever a single share costs—Vanguard doesn’t offer fractional shares.

At first blush, Vanguard charges a pretty steep $25 annual fee for its Roth IRA. However, you can easily have that fee waived by signing up for e-delivery of statements, the annual privacy policy notice, and various other updates … so unless you insist on paper communications, Vanguard’s Roth IRA is effectively fee-free.

For investors with balances of $50,000 or more, Vanguard offers Personal Advisor Services, providing the benefits of a robo-advisor with access to a fiduciary advisor that can offer guidance on your investments. Advisors are available to assist you from Monday through Friday, 8 a.m. to 8 p.m. Eastern.

Vanguard charges a relatively affordable management fee of 0.30% annually for its Personal Advisor Services. But the peace of mind that comes with being able to get guidance from a financial pro could be worth the cost.

With a Roth IRA from Vanguard Personal Advisor Services, you can choose to invest in mutual funds, ETFs, stocks, bonds, CDs, and more. For investors interested in the robo-advisory services but without the assistance from a financial planner—and perhaps with less initial retirement capital to start investing through the famed investment company ($3,000 minimum)—Vanguard also offers its Vanguard Digital Advisor service for an 0.20% annual fee for an all-index investment option of 0.25% for an active/index mix, depending on your elections.

Related: 11 Best Stock Advisor Websites & Services to Seize Alpha

8. Charles Schwab Intelligent Portfolios (Best Robo-Advisor for Cost)


schwab roth ira signup

  • Account minimum: None
  • Minimum initial deposit: None
  • Fees: No annual, opening, or closing fees

Charles Schwab is one of the biggest investment firms in the U.S., and it offers just about every product and service an investor could want. A self-directed Roth IRA from Charles Schwab comes with no minimum deposit requirements nor commissions on online listed equity trades. In addition to individual stocks and ETFs, they also offer access to no-transaction-fee mutual funds (and transaction-fee funds as well), futures, fixed-income investments, and options.

If you’re looking for a Roth IRA and you aren’t interested in managing your own portfolio, Charles Schwab Intelligent Portfolios could be a good solution. Users get access to a pre-built, diversified portfolio of ETFs, automatic rebalancing, and 24/7 account support. Charles Schwab Intelligent Portfolios service doesn’t come with any annual advisory fees, and ETF trades are commission-free. However, there is a $5,000 account minimum, so you’ll need to make a fairly large deposit into your Roth IRA to access this service.

If you upgrade to Schwab’s Premium service, you can also get unlimited guidance from a financial professional. Premium requires a $25,000 investment and charges a one-time planning fee of $300, as well as a $30 monthly advisory fee.

Related: Best Charles Schwab Competitors [Alternatives to Schwab]

9. TD Ameritrade IRA (Best for Free Investment Research Reports)


td ameritrade roth ira signup

  • Account minimum: None
  • Minimum initial deposit: None
  • Fees: No annual, opening, or closing fees

TD Ameritrade is an established discount brokerage offering an array of investment products and in-depth financial market research. If you’re interested in improving your knowledge of the markets over time while also keeping your investment costs low, a Roth IRA from TD Ameritrade may be a smart choice. This firm gives you access to a Premier List report highlighting Morningstar Research Service’s top mutual funds, as well as stock screeners, technical market analysis, market news, and more.

Not only do you have a wealth of information at your fingertips with a TD Ameritrade Roth IRA, but you won’t need to make a minimum deposit to open your account, and you won’t pay any annual advisory fees either.

Editor’s Note: TD Ameritrade is among the best investing apps for people of all experience levels. But some massive changes are afoot that would-be new TD users should know about before diving in.

Charles Schwab announced in 2019 that it would acquire TD Ameritrade, and it closed on the deal in 2020. While it has allowed the TD Ameritrade system to operate independently since then, Schwab announced that in 2023, it would be migrating existing TD accounts over to Schwab—which means if you open a TD account now, you’ll be using Schwab’s platform by the end of the year.

Related: 14 Best Stock Picking Services, Subscriptions, Advisors & Sites

10. Wealthfront (Best Robo-Advisor for Small Balances)


wealthfront roth ira signup

  • Account minimum: None
  • Minimum initial deposit: $500
  • Fees: 0.25% annual management fee; no opening or closing fees

If you want the benefits of a robo-advisor and only have a small sum to invest in a Roth IRA, Wealthfront is worth considering. It only requires a $500 minimum deposit to open a retirement account, and its 0.25% annual management fee is affordable relative to competitors. You get access to a pre-built portfolio of ETFs focused on different themes and assets.

Besides its low cost and tailored fund choices, Wealthfront offers some additional perks for account holders. You can benefit from all the bells and whistles robo-advisors provide, like automatic rebalancing, tax-loss harvesting, and trades. You’ll also get the option to customize your portfolio with different ETFs that align with your interests.

Related: How to Max Out Your 401(k) + Other Retirement Accounts

What Is an IRA?


nest egg time retirement saving investing

An individual retirement account (IRA) is a tax-advantaged account that allows you to save for retirement without needing access to a 401(k) or other employer-sponsored retirement plan. Traditional IRAs and Roth IRAs are the most common types of IRAs. However, there are also SEP IRAs and SIMPLE IRAs, which are generally for small businesses and self-employed people.

A traditional IRAs is a “pre-tax” retirement savings account, since contributions to the account are generally tax-deductible (i.e., they’re made before income tax is imposed on the money). Funds in the account grow on a tax-deferred basis, so they aren’t subject to tax until they’re withdrawn.

With a Roth IRA, which is an “after-tax” retirement account (i.e., contributions are made after income tax is imposed on the funds), there’s no tax break when you put money into the account. However, withdrawals in retirement are generally tax-free because you pay taxes on the initial contributions, which then grow tax-free.

Related: SEP IRA vs. Roth IRA: What’s the Difference?

How Does a Roth IRA Work?


retirement target date 401k ira

You can open a Roth IRA account on your own through an online broker. These accounts typically offer a variety of investment options, including stocks, bonds, exchange traded funds (ETFs), mutual funds, money market funds, index funds, and more. But investments can vary based on the broker you choose. For instance, certain mutual funds might only be available through certain brokers.

You can only put so much money in a Roth IRA each year, though. For 2023, you can contribute up to $6,500 into a Roth IRA for the year if you’re under 50 years old, plus an additional $1,000 if you’re 50 or older.

You can withdraw your contributions to a Roth IRA anytime without paying taxes or penalties, although withdrawing gains before reaching age 59½ could result in a tax bill and a 10% early withdrawal penalty.

Unlike certain other types of retirement accounts, Roth IRAs aren’t subject to the required minimum distribution (RMD) rules once you reach age 73. As a result, all the money in your Roth IRA can remain in the account after you turn 73, and you can also keep contributing to the account as long as you have earned income. This flexibility can be useful if you don’t plan to take Roth IRA distributions until later in life.

Related: Retirement Saver’s Tax Credit: What Is It, How Much, Who’s Eligible + More

What Are the Benefits of a Roth IRA?


retirement insurance annuities couple

Investing in a Roth IRA comes with numerous benefits. Here are a few of the most important advantages.

No Age Restrictions on Contributions

The ability to contribute to a Roth IRA doesn’t depend on your age. That means you can put money into a Roth IRA if you’re a kid with a paper route or a retiree with a part-time consulting job.

YATI Tip: With a custodial Roth IRA, an adult (e.g., a parent or grandparent can manage the account for a minor until the child reaches the age of majority. Custodial accounts are an excellent tool for teaching kids about money. By saving and investing with real money they’ll actually control one day, children can see firsthand how funds in a custodial account can grow over time. Parents also feel more comfortable knowing that this learning process is supervised while the account is still under the custodian’s control.

Earnings Grow Tax-Free

Contributions and potential investment gains accumulate tax-free in Roth IRA accounts. That provides an extra boost to your investments in retirement.

Tax-Free Withdrawals

Withdrawals can be taken from a Roth IRA tax-free and penalty-free if you’re age 59½ or older and it’s been at least five years since you first contributed to a Roth IRA in your name. Plus, as noted earlier, you can withdraw contributions you previously made to a Roth IRA at any time without owing taxes or penalties.

No Required Minimum Distributions

By investing through a Roth IRA, you won’t be forced to tap into your account each year once you reach a certain age. Since you’ve already paid taxes on your contributions, you won’t need to begin taking RMDs when you turn 73 like you would with a traditional IRA or 401(k).

No Income Taxes for Inherited Roth IRAs

If you have assets left in your Roth IRA when you pass away and bequeath your account to your heirs, their withdrawals will also be income tax-free. However, depending on their relationship to you and their physical condition, your heirs might have to drain the Roth IRA account within 10 years after inheriting it.

Related: Best 401(k) Alternatives [If You Can’t Get One At Work]

How Much Can I Contribute To a Roth IRA?


401k alternatives retirement savings jar

The IRS has a few rules that limit how much you can contribute to a Roth IRA each year. Let’s take a look at these restrictions.

Annual Contribution Limits

The IRS sets Roth IRA contribution limits each year, and those limits are relatively low compared to the limits for 401(k) plans. As we already said, you can contribute an annual maximum of $6,500 to a Roth IRA for the 2023 tax year if you’re under 50.

If you’re at least 50 years old, you can also make “catch-up” contributions to your Roth IRA. This allows you to contribute an additional $1,000 each year, for a maximum total of $7,500 in 2023.

Annual Income Limits

For the 2023 tax year, the amount you can contribute to a Roth IRA for the year starts to phase out once your modified adjusted gross income (AGI) exceeds:

  • $138,000 if your tax filing status is single or head of household
  • $218,000 if your tax filing status is married filing jointly
  • $1 if your tax filing status is married filing separately

You can’t contribute to a Roth IRA at all for 2023 if your modified AGI for the year is:

  • $153,001 or more if you use the single or head of household filing status
  • $228,001 or more if you’re married and file a joint return
  • $10,000 or more if you’re married and file a separate return

Related: Best Rollover IRA Accounts

Earned Income Limit

Contributions to a Roth IRA also can’t exceed your earned income for the year. So, if you don’t have any earned income during the tax year, you can’t put any money in a Roth IRA for that year.

Earned income includes wages, tips, self-employment income, commissions, bonuses, and the like. As a result, teens can even contribute to a Roth IRA with money earned from babysitting or shoveling driveways in the winter.

Related: SEP IRA Contribution Limits

How Do Roth IRA Accounts Differ From Traditional IRAs?


retirement savings SEP Roth IRA

Roth IRAs differ from traditional IRAs in a few important ways. Here’s a quick rundown of the most significant differences.

Contributions With Pre-Tax vs. After-Tax Dollars

Traditional IRA contributions are generally made with pre-tax dollars, while Roth IRA contributions are made with after-tax dollars. So, when you contribute to a traditional IRA, you’ll typically benefit from a current-year tax deduction. Unfortunately, you won’t get this benefit with Roth IRA contributions.

Tax- and Penalty-Free Withdrawals in Retirement

While Roth IRAs don’t offer a current-year tax deduction, they do offer tax- and penalty-free withdrawals in retirement. If you anticipate you’ll be taxed at a higher rate in retirement, this can be a huge tax perk. On the other hand, withdrawals in retirement from traditional IRAs count as taxable income.

YATI Tip: If possible, retirees with both traditional and Roth IRAs might want to withdraw money from their traditional IRA in years when their overall income is relatively low. That way, they’ll pay lower tax rates on those withdrawals. Conversely, when their annual income is higher, taking money out of the Roth IRA might make more sense, since that money won’t be taxed when it’s withdrawn.

More Flexibility With Withdrawals Before Retirement

You can withdraw Roth IRA contributions without incurring taxes or early withdrawal penalties before you turn 59½ years old. However, with traditional IRAs, you generally must wait until you are age 59½ to take penalty-free withdrawals (and you’ll still pay taxes on the distribution), but there are exceptions to the penalty rules.

As a result, it’s generally easier to use Roth IRAs to save for non-retirement, longer-term goals. For instance, you can use a Roth IRA to save for a child’s college education or buy a home without having to pay income taxes if you pull your contributions out of a Roth IRA for these types of expenses.

Income Limits

While annual income limits do apply with a Roth IRA (see above), they don’t apply with a traditional IRA. You can contribute to a traditional IRA no matter what you earn.

However, your traditional IRA contributions for the 2023 tax year might not be fully tax-deductible, or deductible at all, if you have a retirement plan at work and your 2023 modified AGI exceeds:

  • $73,000 for single or head-of-household filers
  • $116,000 for married couples filing a joint tax return or surviving spouses

If you’re married, but you and your spouse are filing separate tax returns, the deduction for traditional IRA contributions begins to be phased out if you have even $1 of modified AGI and you have access to a retirement plan at work.

Your deduction can also be reduced or eliminated if you’re not covered by a workplace retirement plan, but your spouse is covered by an employer-sponsored retirement plan. In this case, the 2023 deduction reduction begins for joint filers when their modified AGI is more than $218,000.

Required Minimum Distributions (RMDs)

As already noted, you won’t need to take RMDs from a Roth IRA once you reach age 73. But with a traditional IRA, RMDs apply.

If you have a traditional IRA, your annual RMD amount will vary based on your account balance and your life expectancy (as it’s defined in IRS Publication 590-B).

Related: How to Use Your HSA for Retirement

Can I Contribute To a Roth IRA If I Already Have a 401(k) or a Traditional IRA?


retirement savings nest egg ira 401k

You can make Roth IRA contributions even if you contribute to a 401(k) account through your employer. If you have a traditional 401(k) account and your current-year contributions aren’t included in taxable income, a Roth IRA can offer valuable tax diversification.

Just be aware that annual contribution limits also apply to 401(k) plans. For 2023, you can contribute up to $22,500 to a 401(k) if you’re under 50. Those 50 and older can also make additional catch-up contributions of up to ​​$7,500—for a total of $30,000. (Once again, you can contribute up to $6,500 to a Roth IRA in 2023 if you’re under 50 and your income is below a certain threshold, with an additional $1,000 in catch-up contributions allowed if you’re at least 50 years old.)

Contributing to a Roth IRA and a traditional IRA could also provide tax diversification in retirement. Keep in mind that the annual contribution limit for IRAs is a cumulative contribution limit that applies to the total of all your IRA accounts. So if you’re under 50 and contribute $3,500 to a Roth IRA in 2023, you can only contribute $3,000 to a traditional IRA for the year.

Related: IRA vs. 401(k): How These Retirement Accounts Differ

Related Questions On the Best Roth IRA Accounts


questions and answers large

Here are answers (or reminders) to a few additional questions you might have as you look for the best Roth IRA for you—especially if you’re just beginning to invest for retirement.

How much money do you need to start a Roth IRA?

There’s no minimum required contribution for a Roth IRA, so you can open an account even if you don’t have a lot to invest. Just be aware that certain brokers might have a minimum deposit amount or require a minimum account balance before you can begin investing in certain funds.

Is a Roth IRA good for beginners?

Roth IRAs can be good for beginners, as they offer tax advantages and a wide range of investment options. But if you have an employer-sponsored 401(k) that offers a matching contribution from your company, you might consider putting your money there first to get the full employer match. In general, though, a Roth IRA is a solid, tax-advantaged account for your retirement savings.

Related: Should You Max Out Your 401(k) Each Year?

How should a beginner invest in a Roth IRA?

If you’re interested in investing in a Roth IRA, start by comparing available options. Different Roth IRA providers will offer different features, making them more appealing to certain types of investors. For instance, some might cater to self-directed investors while others offer automated features that simplify things for more hands-off investors.

What are the best Roth IRA accounts for beginners?

Generally, the best Roth IRA accounts for beginners are those that best suit your needs. Every investor is unique, so it’s important to think about your own situation as you compare accounts. Things to consider include which features you’d like from a Roth IRA provider, available investment options, account fees, and more.

Which IRA is best for young adults?

Taxes are an important consideration when determining whether a traditional or Roth IRA is the right choice as a young adult. In general, you’ll want to pay taxes whenever the tax rates are lower for you.

Roth IRAs often make more sense than traditional IRAs if you expect to be in a higher tax bracket in retirement. If you’re currently in a relatively low tax bracket, which is common if you’re just starting out in your career, your Roth IRA contributions will be taxed now, but at a low rate.

On the other hand, if you expect to be in a lower tax bracket when you retire, opening a traditional IRA might make more sense. You’ll get a tax deduction now (assuming you qualify), which will help lower your tax bill now at a time when your tax rate is higher. Yes, you’ll have to pay taxes when you pull money out of the account in retirement, but your withdrawals will be taxed at a lower rate.

Are Roth IRAs a good idea?

Contributing to a Roth IRA can be a good idea, depending on your situation. These accounts can offer tax diversification in retirement when used alongside a traditional IRA or 401(k). Your Roth IRA contributions can grow tax-free, and withdrawals in retirement won’t be subject to taxes. It’s another tool in your investment toolbox, so use it when it makes sense for you.

Related:

Kyle Woodley is the Editor-in-Chief of WealthUp. His 20-year journalistic career has included more than a decade in financial media, where he previously has served as the Senior Investing Editor of Kiplinger.com and the Managing Editor of InvestorPlace.com.

Kyle Woodley oversees WealthUp’s investing coverage, including stocks, bonds, exchange-traded funds (ETFs), mutual funds, real estate, alternatives, and other investments. He also writes the weekly Weekend Tea newsletter.

Kyle spent five years as the Senior Investing Editor at Kiplinger, and six years at InvestorPlace.com, including two as Managing Editor. His work has appeared in several outlets, including Yahoo! Finance, MSN Money, the Nasdaq, Barchart, The Globe and Mail, and U.S. News & World Report. He also has made guest appearances on Fox Business and Money Radio, among other shows and podcasts, and he has been quoted in several outlets, including MarketWatch, Vice, and Univision.

He is a proud graduate of The Ohio State University, where he earned a BA in journalism … but he doesn’t necessarily care whether you use the “The.”

Check out what he thinks about the stock market, sports, and everything else at @KyleWoodley.