This article was updated on January 8, 2018. It was originally published on June 4, 2017.

"Any fool can spend money. But to earn it and save it and defer gratification -- then you learn to value it differently."
-- Malcolm Gladwell 

Being a responsible manager of your money means living below your means and socking dollars away for the future. Most of us know how important it is to save for retirement and that traditional and Roth IRA accounts can be powerful tools to help us do so. But which providers are best? Let's compare IRAs and review some companies that deserve your consideration.

clock with hands pointing to the words "time to retire"

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Traditional and Roth IRAs can build a better retirement

Let's first review just what IRAs are and how they work. There are two main kinds of IRAs -- the traditional IRA and the Roth IRA. With a traditional IRA, you contribute pre-tax money, reducing your taxable income for the year, and thereby reducing your taxes, too. (Taxable income of $70,000 and a $5,000 contribution? Your taxable income shrinks to $65,000 for the year.) The money grows in your account and is taxed at your ordinary income tax rate when you withdraw it in retirement. Many of us will be in lower tax brackets in retirement, so not only is our taxation postponed, but it's often reduced. That's the tax break you get with a traditional IRA.

A Roth IRA has the potential to be much more powerful than that. You contribute post-tax money to a Roth IRA, meaning that your taxable income isn't reduced at all in the contribution year. (Taxable income of $70,000 and a $5,000 contribution? Your taxable income remains $70,000 for the year.) Here's why the Roth IRA is a big deal, though: If you follow the rules, your money grows in the account until you withdraw it in retirement -- when it's yours free of taxes.

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Maximize your future financial security

So how much can you sock away in an IRA? Well, IRA contribution limits for 2018 are $5,500, with people aged 50 and older allowed an extra $1,000 "catch-up" contribution, giving them a maximum of $6,500 for the year.

For best results when saving for retirement with an IRA, contribute as much as you can -- and as soon as you can. The longer your money has to grow, the more it can grow. Imagine, for example, that you contribute $4,500 every year for 25 years to an IRA and it grows at 8% annually. That will grow to about $355,000 -- which is pretty good. But if you contribute $5,500 annually (just $1,000 more) and it all grows at 8% per year, the end result will be $434,000 -- a difference of $79,000!

Of course, as the annual contribution limits rise each year, you should aim to keep contributing more, ending up with an even bigger nest egg. The table below shows how much money you can accumulate with annual $5,500 contributions at different average annual rates of growth:

Growing for

Growing at 8%

Growing at 10%

Growing at 12%

15 years




20 years




25 years




30 years



$1.5 million

Source: Calculations by author.

Note, too, that if you accumulated the amounts above, they would be taxable income to you if they were in a traditional IRA, but could be all yours with no taxes due if they were in a Roth.

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Compare IRA accounts available to you

So -- which IRA accounts will serve you best? Well, all IRA accounts of the same type will generally conform to the same rules. Your contribution limits, for example, will be the same no matter which provider you choose. You'll have to start required minimum distributions (RMDs) at age 70 1/2 with any traditional IRA account.

But still, there are some differences to note, and it can matter where you open your IRA. Many financial services companies, such as brokerages, banks, and mutual fund companies, offer IRAs. You might prefer a particular company for any of a number of reasons. If you do a lot of business with one company and like it, you might want to stick with it. Having different accounts at one institution can make it extra easy to move money between accounts when you want to -- such as if you want to fund your IRA with money from a brokerage or bank account.

While retirement accounts such as 401(k)s and 403(b)s tend to offer you a limited menu of investment options, such as a handful of mutual funds, IRAs can be much more liberal. An IRA opened through your brokerage will let you invest in just about any stock through it, as well as whichever mutual funds the brokerage offers, which can number in the hundreds or thousands. Opening your IRA account with a particular mutual fund company, though, can limit you only to the funds of that company. Of course, that can be OK, as one or a few simple and inexpensive index funds can be all you need -- and some companies, such as Fidelity and Vanguard, offer a huge assortment of funds.

Consider, too, the minimum initial investment amount for any provider, as some have no minimum at all, while others might require at least $1,000 or more. If that's a deal-breaker for you, take note. Finally, consider fees and trading commissions. These days it's common to see commissions of $10, $7, $5, or less. If you expect to do a lot of trading, you'll want to choose a provider with very low commissions. If you'll trade infrequently, which is generally best, you don't necessarily need the lowest trading fees.

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Which providers are best?

Our IRA center offers a handy chart featuring a handful of solid IRA providers for your comparison-shopping pleasure.

Let me name some names, though. Here are a few companies that offer IRA accounts that would serve most investors well. If you seek low trading commissions, consider these:


Stock trading commissions

Ally Invest

As low as $5 per trade

Charles Schwab 

As low as $5 per trade

Fidelity Investments

As low as $5 per trade

Capital One Investing

As low as $7 per trade

E*Trade Financial

As low as $7 per trade

TD Ameritrade

As low as $7 per trade

Source: Brokerage websites.

If you want a minimum investment amount of $0, consider E*Trade, Fidelity, TD Ameritrade, and Vanguard, among others.

Note, too, that some brokerages will try to tempt you with sign-up bonuses. These can be well worth considering. For example, depending on how much you deposit into your account, you can collect a bonus of between $100 and $600 (and sometimes more) from a variety of brokers. This won't typically work if you're opening a new account and only funding it with $5,500 or $6,500 to start, but if you're moving funds into a new IRA account from another one, or are rolling over 401(k) funds, you may be able to collect a nice reward.