Please ensure Javascript is enabled for purposes of website accessibility

This device is too small

If you're on a Galaxy Fold, consider unfolding your phone or viewing it in full screen to best optimize your experience.

Skip to main content

Best IRA Accounts for July 2022

Many or all of the products here are from our partners that pay us a commission. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.

An individual retirement account (IRA) is a smart investment vehicle for a variety of investment goals. It can help set you up for retirement, even if you already contribute to a 401(k), and it can be a valuable tool for tax planning.

But an IRA is only as good as the place you keep it. Brokers decide which investments you have access to and how much the account costs you, plus, they influence how much the account will grow over time.

In this guide, we'll share our picks for the best IRA accounts, plus some terms and details you should know to choose the right broker for your retirement savings.

Ratings Methodology
Bottom Line

Merrill Edge® Self-Directed is a top IRA option due to its seamless integration and added perks. Merrill also scores points for no account minimums and a wealth of no-transaction fee mutual funds.

Fees:

$0 for stock and ETF trades

Account Minimum:

$0

Special Offer

Open a self-directed account and get up to $600

Open Account for Merrill Edge® Self-Directed

On Merrill Edge® Self-Directed's Secure Website.

Bottom Line

TDA is one of our few 5-star all-around brokers, and it keeps that top rating for IRAs with its large amount of commission-free ETFs and mutual funds, along with strong sign-up promotions.

Fees:

$0 stock trades

Account Minimum:

$0

Open Account for TD Ameritrade

On TD Ameritrade's Secure Website.

Bottom Line

E*TRADE is a strong option for IRAs with hundreds of commission-free ETFs and over 4,000 no-transaction-fee mutual funds. Additionally, they don’t have account minimums for IRA accounts.

Fees:

Commission Free

Account Minimum:

$0

Special Offer

Open and fund an E*TRADE account & get up to $600 or more

Open Account for E*TRADE

On E*TRADE's Secure Website.

Bottom Line

Fidelity is a top option for IRAs with thousands of no-transaction fee mutual funds and hundreds of commission-free ETFs, along with no account fees or account minimums.

Fees:

No account fees to open a Fidelity retail IRA

Account Minimum:

$0

Bottom Line

Schwab sports hundreds of no-commission ETFs and the largest amount of no-transaction-fee mutual funds of any broker we evaluated, and individual stock trades are now $0. Its lineup of retirement accounts expands beyond just online access to robust account management capabilities via its mobile app.

Fees:

$0 stock and ETF trades

Account Minimum:

$0

Bottom Line

Vanguard gets dinged slightly in our model for having high-ish account minimums for some of its services and an often-pricey fee structure for individual stocks, but it remains the gold standard for index funds and ETFs.

Fees:

$0 stock and ETF trades

Account Minimum:

$0

Overview of the best IRA accounts

Merrill Edge® Self-Directed

Best for: Customer support

Merrill Edge is a solid choice for virtually any type of retirement brokerage account, with a wide variety of account types and thousands of no-transaction-fee mutual funds. Merrill Edge is an especially good fit for Bank of America customers, as the bank owns Merrill and the investment side is well integrated with the banking functionality of its platform.

TD Ameritrade

Best for: Research

With a full suite of educational and research offerings available, investors looking for any type of retirement brokerage account should enjoy TD Ameritrade. TD Ameritrade has excellent customer support, no minimum deposits, and one of the best selections of no-transaction-fee mutual funds in the industry. The broker's web-based and mobile trading platforms are very easy to learn, and more advanced investors will appreciate TD Ameritrade's thinkorswim software.

Ally Invest

Best for: Low fees

Ally Invest is a good broker for investors who want a simplified, user-friendly investment platform, especially those who want to invest in mutual funds, as Ally's standard $9.95 commission is one of the lowest in the industry. Ally is a full-service bank as well, so it could be a smart choice for investors who want to keep their banking and investment accounts at the same institution.

SoFi Invest

Best for: Low fees

Investors who need a traditional, Roth, or SEP-IRA and want a high-tech, fully integrated financial app to manage their investments and banking needs should take a look at SoFi Invest. With no minimum deposits, the ability to buy fractional shares of stock, and a user-friendly platform, SoFi is an especially good choice for investors who want to get started with their retirement accounts. SoFi is most appropriate for investors who want to invest in stocks and ETFs, as the platform doesn't currently support mutual funds and bonds.

E*TRADE

Best for: Mobile platform

E*Trade is an excellent choice for investors who want a retirement account with tons of investment options and educational resources. E*TRADE offers many different retirement account types, has thousands of fee-free mutual funds, and even has a network of physical branch offices for investors who need face-to-face guidance. For investors who don't want to choose individual stocks and funds for themselves, E*TRADE offers a terrific robo-advisor platform as well.

Fidelity

Best for: Investors

Investors who want a full-featured brokerage account for their retirement savings need look no further than Fidelity. Fidelity offers plenty of retirement account types, lots of no-commission mutual funds (including Fidelity's own), access to international stock exchanges, and the ability to buy fractional shares of stocks. It also has an extensive branch network for investors who want face-to-face guidance.

Charles Schwab

Best for: Retirement investors

Investors who want a full-featured broker with lots of investment options and account types for their retirement savings may find a good fit with Charles Schwab. Investors can buy fractional shares of stock, plenty of no-commission mutual funds, and can also take advantage of Schwab's full suite of banking products like checking accounts and credit cards in the same place as their retirement accounts. Schwab also has about 340 branch offices, making it an excellent choice for investors who may want face-to-face help.

Vanguard

Best for: Index funds

Investors who want to use mutual funds extensively in their retirement strategies should appreciate Vanguard. Vanguard offers thousands of no-transaction-fee mutual funds, including its own low-cost index funds (which are rarely on fee-free lists elsewhere). Vanguard has several retirement account types, and also allows investors to buy and sell stocks, ETFs, and options.

What is an individual retirement account?

An individual retirement account (IRA) is a tax-advantaged investment account you can use to save for retirement. One of the biggest benefits of an IRA is that, unlike a 401(k), it isn’t tied to your employer, and it offers way more flexibility in how you invest your money for the future.

Some investors think of an IRA as a tax-efficient container for holding investments. In practice, that's all it is -- an account in which you can hold investments and enjoy tax benefits that you wouldn't receive if you used an ordinary brokerage account. The trade-off is that the account is designed to be used for retirement, so you lose the tax benefits if you withdraw money before then.

Let's look at the three most common types of individual retirement accounts:

  • Traditional IRA: A traditional IRA is one to which your contributions are tax deductible, and you pay taxes when you withdraw the money in retirement. Traditional IRAs are best if you expect to be in a lower income tax bracket in retirement than while you're working. You can withdraw from a traditional IRA after age 59 1/2 without penalties; early withdrawal gets you a tax penalty.
  • Roth IRA: With a Roth IRA, your contributions aren't tax deductible, and instead you pay no taxes when you withdraw the money. Because you've already paid taxes on the contributions, you can withdraw from Roth IRA contributions anytime without penalty. Roth IRAs are generally best if you expect to be in a higher tax bracket in retirement, or if you need to keep some of your retirement savings more liquid.
  • SEP IRA/SIMPLE IRA: SEP IRAs and SIMPLE IRAs are for self-employed workers and small business owners. SEP and SIMPLE IRAs are treated like traditional IRAs for tax purposes, meaning that contributions are made with pre-tax dollars, and withdrawals are taxed as income in retirement. The primary advantage of SEP and SIMPLE IRAs is that they have substantially higher maximum annual contribution limits than a traditional or Roth IRA.

TIP

Buying your first stocks: Do it the smart way

Once you’ve chosen one of our top-rated brokers, you need to make sure you’re buying the right stocks. We think there’s no better place to start than with Stock Advisor, the flagship stock-picking service of our company, The Motley Fool. You’ll get two new stock picks every month, plus 10 starter stocks and best buys now. Over the past 17 years, Stock Advisor’s average stock pick has seen a 304% return — more than 2.5x that of the S&P 500! (as of 6/17/2022). Learn more and get started today with a special new member discount.

Why use an IRA?

An IRA offers several major advantages over a traditional brokerage account. When deciding between a brokerage account vs. an IRA, the primary difference comes down to how your investments are taxed, which can have a huge impact on the ultimate value of your investments.

In a traditional brokerage account, dividends, interest, and capital gains are taxable, whether you withdraw the proceeds or not. If you sell an investment that's appreciated by $5,000 over the year, you would owe taxes on the $5,000 gain. If you pay, say, 20% taxes on that gain, you would have only $4,000 to reinvest after paying $1,000 in taxes.

With a traditional IRA, you pay taxes only when you withdraw from the account. So if you sell an investment that's appreciated by $5,000, you won't pay taxes on the gain unless you withdraw the money from the IRA. That lets you lock in a gain and reinvest the money -- taking advantage of compound interest -- without losing some of the gain to taxes.

Likewise, Roth IRA gains aren't taxed at all, because the account is funded with post-tax dollars. So if you have a $5,000 gain on an investment, you can reinvest without losing money to taxes, and you can withdraw the increased amount in retirement without paying taxes.

An example of IRA tax benefits

Let's illustrate the benefits of using an IRA over a taxable account.

Assume you start with a $5,000 balance and pay 20% tax on capital gains. For simplicity, also assume that every time your account balance doubles, you reinvest.

IRA Taxable account
Starting balance $5,000 $5,000
First double $10,000 $9,000
Second double $20,000 $16,200
Third double $40,000 $29,160
Fourth double $80,000 $52,488

Realistically, most people don't employ such a strategy (selling everything each time their balance doubles), but many investors frequently sell stocks or funds to keep their accounts in line with their investment goals.

As you can see, the taxable account rapidly falls behind the IRA's growth because of the tax drag. When the IRA balance doubles, the taxable account balance increases by only 80%, due to the 20% tax applied to capital gains. This difference may seem small, but it really adds up as your investments appreciate and your account balance grows.

In the market for an online broker?

We're here to help. Read our expert reviews and compare top brokerage accounts to find the best trading platform for your needs.

Best IRA accounts for mutual fund investors

While an individual retirement account offers more investment choices than virtually any other retirement account, the investments you can buy inside your IRA are ultimately limited by the selection your broker offers.

Many investors use funds to simplify their investment decisions. With access to just three funds, you could build a diversified portfolio that could withstand major fluctuations in the market.

If you use mutual funds or exchange-traded funds (ETFs) to build a portfolio, you'll want to be picky when choosing a broker. That's because mutual fund availability and costs differ from broker to broker.

Here are some examples of brokers that offer mutual funds.

Broker Mutual Funds No-transaction-fee Mutual Funds
Ally Invest More than 12,000 None
Charles Schwab More than 10,000 More than 4,000
E*TRADE More than 7,000 More than 4,400
Fidelity More than 10,000 More than 3,000
Interactive Brokers More than 11,000 More than 4,300
Merrill Edge More than 3,000 More than 3,000
TD Ameritrade More than 13,000 More than 3,700
Vanguard More than 6,000 More than 3,000

Choosing a broker that offers a large assortment of no-transaction-fee mutual funds can help you avoid commission expenses. This is particularly advantageous if you're just starting out because this can save you a tremendous amount of money over time.

LEARN MORE: How to invest in mutual funds

Best IRA accounts for stock investors

If you plan to invest in individual stocks in your IRA, you can be less discerning when picking a brokerage. That's because virtually all brokers offer the same basic ability to buy or sell shares of companies listed on U.S. stock exchanges.

Investors who want to buy and sell individual stocks may find commissions, functionality of the broker's platform, and other features to be more important than fund investors do.

Here's what some major online brokerages offer for individual stock trading.

Broker Stock Commission American Depository Receipts (ADRs) Foreign Stocks
Ally Invest $0 Yes ADRs only
Charles Schwab $0 Yes ADRs plus 30 countries
E*TRADE $0 Broker-assisted trades ADRs only
Fidelity $0 Yes, but only for the whole account ADRs plus 25 countries
Interactive Brokers $0 Yes, but only for the whole account ADRs plus more than 100 markets around the world
Merrill Edge $0 Yes ADRs and broker-assisted trades internationally
TD Ameritrade $0 Yes ADRs and broker-assisted trades internationally
Vanguard $0 online ($25 for broker-assisted trades over the phone) Yes ADRs only

As you can see, all of our picks for the best IRA brokerage firms charge $0 for an ordinary stock trade.

Given the virtually nonexistent difference in pricing among major online brokers, you might choose a broker based on more personalized features. For example, a Merrill Edge investment account can be linked to a Bank of America checking account, and a Charles Schwab account can link with a Schwab online bank account.

Need a checking account? See The Ascent's roundup of the best checking accounts.

What are the contribution limits for IRAs?

The amount you can contribute to an individual retirement account in a given tax year depends on the type of the account, your income, and your age.

The maximum contribution amounts for 2021 are detailed in the table below. Keep in mind that these are the maximums -- you may be restricted based on your income and whether you have another retirement plan available through your employer.

Account Type Younger Than 50 50 or Older
Traditional IRA $6,000 $7,000
Roth IRA $6,000 $7,000

When can you make IRA contributions?

IRA contribution limits follow a weird calendar. You can contribute for any given year up to the tax-filing date for that year. For example, if you want to make contributions for the 2021 tax year, you have until the tax deadline in 2022 to do so.

The timeline extends to the tax-filing day for tax-planning purposes. Some people wait until tax time to figure out whether it makes sense to contribute to a traditional IRA, Roth IRA, or both.

What is a rollover IRA?

One big perk of individual retirement accounts is that you can roll over balances from an employer-sponsored plan like a 401(k) into an IRA. Many people open a rollover IRA when they change jobs, thus moving their retirement investments from a 401(k) to a new IRA.

There are two ways to do a 401(k) rollover to an IRA:

  1. Direct transfer: This is by far the easiest method. In a direct transfer, any investments you hold in a 401(k) or other retirement account can simply be moved to an IRA. You don't have to sell your investments to move cash over. For example, if you own shares of several mutual funds, those shares are just moved from your existing accounts to your rollover IRA.
  2. Indirect transfer: An indirect transfer can be messy. In an indirect transfer, your investments are sold, and your 401(k) plan sponsor will send you a check for the balance. You then have 60 days to deposit the check into a rollover IRA to avoid paying taxes and penalties on the amount as a withdrawal.

We recommend doing a direct transfer whenever possible because it will minimize the effort required and can potentially save you a fortune in transaction costs.

LEARN MORE: How to Rollover a 401(k)

The discount broker advantage

We think discount brokers (the brokers you see on our list) are the smartest place for individual investors to open an IRA. That's because discount brokers have substantially reduced the cost of investing, which helps you save more for retirement.

Most online brokers offer free trading, so you won't lose a chunk of your investments to fees. Not all brokerage firms have reduced their trading prices, though.

Many full-service brokerage firms still charge $100 or more per trade, while others clip massive commissions on mutual funds, equal to a percentage of the amount you invest. In theory, these high fees and commissions help traditional brokerages offer more hands-on attention and advice. But in practice, high commissions also encourage brokers to make decisions with your money that put more money into their pockets.

Self-directed investors now have access to more affordable tools that can help them select the investments they think are in their best interest -- and save money on fees and commissions. To compare top brokerages, see our expert reviews of the best online stock brokers.

Broker/Advisor Best For Commissions Next Steps
Merrill Edge® Self-Directed Offer Image
Rating image, 4.5 out of 5 stars.
Rating image, 4.5 out of 5 stars.
Best For:

Best for customer support

Commission:

$0 for stock and ETF trades

TD Ameritrade Offer Image
Rating image, 5.0 out of 5 stars.
Rating image, 5.0 out of 5 stars.
Best For:

Best for research

Commission:

$0 stock trades

Ally Invest Offer Image
Rating image, 4.5 out of 5 stars.
Rating image, 4.5 out of 5 stars.
Best For:

Best for low fees

Commission:

$0 stock and ETF trades

SoFi Invest Offer Image
Rating image, 4.5 out of 5 stars.
Rating image, 4.5 out of 5 stars.
Best For:

Best for low fees

Commission:

$0 per trade, expense ratio 0.03%-0.08%

E*TRADE Offer Image
Rating image, 4.5 out of 5 stars.
Rating image, 4.5 out of 5 stars.
Best For:

Best for mobile platform

Commission:

Commission Free

Fidelity Offer Image
Rating image, 5.0 out of 5 stars.
Rating image, 5.0 out of 5 stars.
Best For:

Best for investors

Commission:

No account fees to open a Fidelity retail IRA

Charles Schwab Offer Image
Rating image, 4.5 out of 5 stars.
Rating image, 4.5 out of 5 stars.
Best For:

Best for retirement investors

Commission:

$0 stock and ETF trades

Vanguard Offer Image
Rating image, 4.5 out of 5 stars.
Rating image, 4.5 out of 5 stars.
Best For:

Best for index funds

Commission:

$0 stock and ETF trades

FAQs

  • Some brokers set a minimum initial investment required to open an IRA. This is more common if you're opting for a professionally managed IRA or want to put your IRA into a robo-advisor. Most brokers that offer a self-directed IRA have no minimum deposit requirement, so you can get started with as little as a few dollars.

    If you're opening an account with a small initial investment, look for a brokerage with zero or low fees. You'll likely also want a broker that lets you purchase fractional shares or ETFs so you can buy into stocks even if you can't afford a full share.

  • The IRA contribution limit changes annually. For 2021, you can contribute a maximum of $6,000 to an IRA or $7,000 if you are 50 or over and eligible for catch-up contributions. If either you or your spouse have access to a workplace retirement plan, your eligibility to make tax-deductible contributions will phase out at higher income levels.

  • Most online brokerage firms let you open a self-directed IRA for free. This means you chose your investments. If you want professional management or a robo-advisor to select investments, you'll pay a fee for these services.

    Some brokerages charge a commission for buying and selling assets within your IRA. But an increasing number of online brokers are eliminating commission fees for stock trades and offering commission-free ETFs or no-load mutual funds. You might instead pay a flat monthly fee.

    However, you'll still pay fees associated with certain types of investments, such as fund management fees for mutual funds. These fees are paid to the fund managers, not your brokerage firm, and they'll apply no matter which broker you use to buy the investment.

  • Yes. Many people think they can only have one IRA, but this is simply untrue. You can hold as many IRAs as you want -- but the contribution limit applies across the board. Opening more than one account doesn't increase your limit. In other words, the contribution limit is per person, not per account.

  • The exact process for withdrawing money from an IRA depends on the broker, but it typically won't take longer than a day or two. You can choose to withdraw large sums of money periodically, or take smaller amounts whenever you need it.

  • It depends. The ability to make tax-deductible traditional IRA contributions is income-restricted if you have a retirement plan through your employer. And with a Roth IRA, the ability to contribute is income-restricted, although there's a backdoor contribution method that can allow anyone to use a Roth IRA to save on taxes in retirement.

  • The short answer is that it depends on what you invest in. If you put your IRA funds into speculative investments, you could potentially lose all of your money. On the other hand, if you invest wisely in blue-chip stocks, ETFs, and mutual funds, the chance of losing all of your money is virtually zero.

  • Maybe. Anyone can contribute to a traditional IRA, but in order to deduct your contributions, your income must be below certain thresholds if you have a 401(k). If you already have a Roth IRA, you may still qualify for deductible traditional IRA contributions, but your total contributions to both accounts cannot exceed the IRS's annual maximum.

  • It depends, but it's worth pointing out that some bank IRAs don't offer much in the way of investment products and are focused on things like Certificates of Deposit (CDs) and money market accounts, which aren't likely to produce strong returns over time, or even to beat inflation. You'll notice that all of our favorite IRAs are offered by brokers, not by traditional banks.

About the Author