Best Roth IRA Accounts for December 2023

Roth IRAs are retirement accounts that can help you grow money tax-free. But just because every Roth IRA follows the same tax rules and structure doesn't mean every IRA provider will offer you the same value.

We've broken down our best Roth IRA accounts into two categories: Best Roth IRAs for Self-Directed Investing and Best Roth IRAs for Hands-Off Investing. Self-directed brokers will be controlled by you -- you will buy and sell your own investments on your own timeline.

Our hands-off Roth IRA accounts are robo-advisors. These are platforms will help you assess your risk tolerance and determine your investment time horizon, and then it manages your portfolio over time to maximize return potential. Depending on your investment goals and individual preferences, either could be a great choice.

3 Featured Picks From Our Best Roth IRA Accounts

There are a lot of options to compare, even on this page. It can be overwhelming! If you're looking for a place to start, here are three Roth IRA accounts our experts recommend and why they like them:

• Robinhood: Standout Roth IRA mobile experience 
• SoFi Active Investing: Great Roth IRA for self-directed investing 
• Fidelity: Overall high-quality IRA experience

Most major brokerage firms offer Roth IRAs, but that doesn't mean every broker's Roth IRA will offer the same features. With that in mind, here are four factors to compare as you're shopping for the best Roth IRA broker.

• Fees and commissions: Most online brokers offer no commission fees on stock trading, but may have other fees, such as account transfers. When looking for the best Roth IRA accounts, don't forget to compare fee schedules.
• Mutual funds: If you're planning to invest in mutual funds, check that the broker offers a wide selection of them in Roth IRA accounts and on a no-transaction-fee (NTF) basis.
• Platform/app: This is where brokers often differ immensely. Some cater to hands-on, active investors by loading trading platforms with tools, charts, and resources. Others build no-frills platforms for investors who value simplicity. If you're unsure where you lie on that scale, test drive a few platforms (most will let you do this) to see which one you like best.
• Resources: If you want to learn about investing as you're doing it, look for platforms with fully-stacked libraries or access to third-party research.

Best Roth IRA Comparison

A Roth IRA is an individual retirement account (IRA) that lets you contribute after-tax dollars and enjoy the power of compound interest tax-free. That means you don't have to pay taxes on earnings in a Roth IRA, so long as you take distributions after you hit 59 1/2 years old.

Roth IRA accounts have annual contribution limits set by the IRS, which are usually lower than 401(k)s. You can invest in a number of securities within a Roth IRA, such as stocks, bonds, mutual funds, or exchange-traded funds (ETFs).

There are some exceptions to the withdrawal restrictions. For example, you can withdraw as much as $10,000 from your IRA to use toward a first-time home purchase. You can take out any amount to pay for college expenses. And with Roth IRA accounts, you can withdraw your original contributions (but not your investment profits) at any time and for any reason.

Learn more: Roth IRA benefits

A Roth IRA works like this: You contribute post-tax dollars (money you've already paid taxes on), then invest that money in whatever securities fit your investing strategy, like stocks or mutual funds. At any time, you can sell those securities for a profit and you don't have to pay capital gains taxes, so long as it's held within your Roth IRA. Better yet, when you turn 59 ½, you can withdraw your earnings tax-free, since you already paid taxes on your contributions.

Roth IRAs let you withdraw your contributions freely without penalty, but your earnings might be subject to taxes or penalties if you withdraw before you pass the 59 ½ mark or before the account has been open at least five years. Unlike traditional IRAs and 401(k)s, you don't have to take minimum required distributions, meaning there's no age after which you have to start withdrawing from your Roth IRA.

Contributing up to the annual limit will certainly give your Roth IRA a good foot forward, but your selection of investments is the real engine driving your account's long-term growth. Since your account isn't bogged down by capital gains taxes, you can take full advantage of growing your money by compound interest using a combination of stocks, ETFs, mutual funds, bonds, and other securities.

For instance, let's say you contribute $6,000 annually into your Roth IRA for 25 years and choose to invest in an S&P 500 index fund. If we assume a modest 7% annualized rate of return for this fund, your account would grow to $438,623 at the end of 25 years, with $150,000 in contributions and $282,623 from interest you've earned.

For tax year 2023, contributions to your IRA accounts cannot exceed:

• $6,500 if you're under 50 years of age
• $7,500 if you're age 50 or older (known as a "catch-up contribution")

This limit is per person, not per account. If you have two IRA accounts -- say, a traditional IRA and Roth IRA -- your total contributions cannot exceed the annual limit.

Whether you're eligible to contribute to a Roth IRA brokerage account depends on your modified adjusted gross income (known as modified AGI or MAGI). This is your adjusted gross income (read: what the IRS uses to calculate your tax bill), plus deductions and exemptions added back in. For 2023, the MAGI income limits are the following:

If your income is too high, you might be able to contribute through the backdoor Roth IRA contribution method. With this method, you contribute to a traditional IRA and immediately convert the account to a Roth. Unlike a direct Roth IRA contribution, there are no income restrictions if you do this.

Opening a Roth IRA can be boiled down to a few simple steps. If you've compared the best Roth IRA accounts and you're ready to open an account of your own, here's everything you need to get your Roth IRA up and running:

1. Decide if you're eligible. Take a look at the income limits above to see if you qualify.
2. Pick a Roth IRA provider. Compare different providers, then decide which one is right for you.
3. Open an account. You'll need identification (like a driver's license), your Social Security number, and bank account information. In addition, you'll create login credentials for your account and indicate how you want to fund it.

Most Roth IRA providers can approve you instantly (or at least within a few business days), so long as they can verify your identity. Once your account has been approved, you can transfer money into your Roth IRA, pick your investments, and continue contributing until you hit the annual limit.

You can make a Roth IRA contribution starting on the first day of the calendar year and ending on Tax Day. So 2023 contributions could be made any time from Jan. 1, 2023, through April 15, 2024. In fact, if you make a contribution between Jan. 1 and the tax deadline, your Roth IRA provider will likely ask you to choose which tax year you'd like the contribution to be counted for.

RELATED: Many people have their contributions automatically deducted from their bank. See The Ascent's roundup of the best checking accounts.

A traditional IRA is funded with pre-tax dollars, that is, money you haven't paid taxes on. This money is deducted from your gross income and can potentially lower your tax bill for the year you made the contribution. When it comes time to withdraw money from a traditional IRA, you'll pay taxes at whatever tax bracket you fall into.

Don't miss that: With a traditional IRA, you receive your tax benefit now in the form of reduced taxable income. In exchange for that reduction, you pay taxes on traditional IRA distributions in retirement. A Roth IRA, however, is funded with after-tax dollars and doesn't reduce your taxable income. However, with a Roth IRA, you receive your tax benefit later in the form of tax-free distributions.

To decide which IRA is right for you, you have to figure out which will save you the most on your lifetime taxes.

Typically, traditional IRAs are ideal for high-income earners who anticipate having a lower tax rate in retirement. You can reduce your taxable income today (potentially saving on this year's taxes) and withdraw at a time when you're not earning as much income and can fall into a lower tax bracket. For example, if your tax rate is 39% today but you expect a 22% rate in retirement, then it would be wise to defer paying taxes until you fall into that lower tax bracket.

Conversely, Roth IRAs usually make sense for those who are in lower tax brackets today, but anticipate being in a higher tax bracket in retirement. If your tax rate is lower today then you'll save more by paying taxes at your current rate rather than waiting until retirement. For instance, if your tax rate is 12% today, but you anticipate a rate of at least 22% in retirement, it would be wise to pay taxes today and withdraw tax-free later.

Aside from the tax structure, these account types have several similarities. Both have the same annual contribution limit. Investments within the accounts are tax-deferred for as long as the money stays in the account. There are some other key advantages to a Roth IRA, such as the ability to withdraw contributions at any time and the lack of RMDs. However, the main difference is the tax structure.

A 401(k) is great for retirement savers because it has a higher annual contribution limit than Roth IRAs. Much like traditional IRAs, 401(k)s also give you a tax benefit now, as your contributions are pre-tax, meaning they're deducted from your gross income and could help you save money on taxes. In exchange for that tax deferral, you'll pay taxes on 401(k) distributions at whatever your tax bracket is at that time.

Roth IRAs, however, have some muscle of their own. Your annual contribution limits may be smaller, but you don't have to worry about pesky required minimum distributions (RMDs), which require 401(k) holders to start withdrawing at age 72. And while Roth IRAs can't reduce your taxable income, you also don't have to pay taxes on distributions in retirement.

But 401(k)s have the ultimate trump card in one regard: employer matches. That's right, if your employer will match your 401(k) contribution, don't hesitate to take the match (that's free money!).

Here's an overview of the pros and cons of Roth IRAs when compared with other types of retirement accounts:

A Roth IRA could be right for you if:

• You're not worried about saving money on your taxes now.
• You would rather keep your taxable income as low as possible after you retire.
• You don't qualify for a traditional IRA, but you qualify for a Roth IRA contribution.
• You don't want to be forced to withdraw money from your savings after you reach a certain age.
• You don't want all of your money to be tied up until you retire.

So why open a Roth IRA? A Roth IRA account can be a great way to set aside money for retirement, but as we've discussed here, it isn't the only option you have. When planning for retirement, there's no such thing as a perfect retirement account for everyone. A Roth IRA is no exception. But with our guidance and a little research, you can find the best place to open a Roth IRA with ease.