*The 5-year holding period for Roth IRAs starts on the earlier of: (1) the date you first contributed directly to the IRA, (2) the date you rolled over a Roth 401(k) or Roth 403(b) to the Roth IRA, or (3) the date you converted a traditional IRA to the Roth IRA. If you're under age 59½ and you have one Roth IRA that holds proceeds from multiple conversions, you're required to keep track of the 5-year holding period for each conversion separately.
**If you inherit a Roth IRA, you must take RMDs, but they're tax-free as long as the original account owner held the account for at least 5 years.
**When taking withdrawals from an IRA before age 59½, you may have to pay ordinary income tax plus a 10% federal penalty tax.
You may wish to consult a tax advisor about your situation.
Advice services are provided by Vanguard Advisers, Inc., a registered investment advisor, or by Vanguard National Trust Company, a federally chartered, limited-purpose trust company.
Traditional and Roth IRAs allow you to save money for retirement. This chart highlights some of their similarities and differences. You can contribute if you (or your spouse if filing jointly) have
taxable compensation. Prior to January 1, 2020, you were unable to contribute if you were age 70½ or older. You can contribute at any age if you (or your spouse if filing jointly) have
taxable compensation and your modified adjusted gross income is below certain amounts (see and
2022 and
2023 limits). You can deduct your contributions if you
qualify. Your contributions aren’t deductible. The most you can contribute to all of your traditional and Roth IRAs is the smaller of: Your tax return filing deadline (not including extensions). For example, you can make 2022 IRA
contributions until April 18, 2023. You can withdraw money anytime. You must start taking
distributions by April 1 following the year in which you turn age 72 (70 1/2 if you reach the age of 70 ½ before January 1, 2020) and by December 31 of later years. Any deductible contributions and earnings you withdraw or that are distributed from your traditional IRA are taxable. Also, if you are under age 59 ½ you may have to pay an additional 10% tax for early withdrawals unless you qualify for an
exception. Not required if you are the original owner. None if it’s a qualified distribution (or a withdrawal that is a qualified distribution). Otherwise, part of the distribution or withdrawal may be taxable. If you are under age 59 ½, you may also have to pay an additional 10% tax for early withdrawals unless you qualify for an
exception. Any deductible contributions and earnings you withdraw or that are distributed from your
traditional IRA are taxable. Also, if you are under age 59 ½ you may have to pay an additional 10% tax for early withdrawals unless you qualify for an exception. None
if it’s a qualified distribution (or a withdrawal that is a qualified distribution). Otherwise, part of the distribution or withdrawal may be
taxable. If you are under age 59 ½, you may also have to pay an additional 10% tax for early withdrawals unless you qualify for an
exception.Who can contribute?
Traditional IRA
Roth IRA
Are my contributions deductible?
Traditional IRA
Roth IRA
How much can I contribute?
What is the deadline to make contributions?
When can I withdraw money?
Do I have to take required minimum distributions?
Traditional IRAs
Roth IRAs
Are my withdrawals and distributions taxable?
Traditional IRAs
Roth IRAs
Additional Resources:
When researching the best way to save for your nonworking years, you likely have come across individual retirement accounts, also known as IRAs.
There are a few different types of IRA accounts and one of the most popular is a Roth IRA. It works much the same as a traditional IRA — you can regularly contribute to the account and watch your investments grow year over year so you have a nest egg to tap in retirement.
But the Roth IRA also offers a few different components that makes it different from a traditional IRA, including limits on who can contribute, the ability to withdraw your earnings in retirement tax-free and other benefits worth considering (see our FAQ for more details).
To determine which Roth IRAs are the best overall, Select reviewed and compared over 20 different accounts offered by national banks, investment firms, online brokers and robo-advisors. For the purposes of this ranking, we focused only on Roth IRAs, though the best providers often overlap with those that offer the top traditional IRAs. (Read Select's list of the best traditional IRAs.)
Our top Roth IRA selections require no (or low) minimum deposit, offer commission-free trading of stocks and ETFs, provide a variety of investment options and have educational resources or tools that accountholders can access.
Here is Select's list of the top Roth IRAs. (See our methodology for more information on how we choose the best Roth IRAs.)
Best Roth IRAs
- Best overall: Charles Schwab Roth IRA
- Best for beginner investors eager to learn: Fidelity Investments Roth IRA
- Best for hands-on beginner investors: Ally Invest Roth IRA
- Best for hands-off beginner investors: Wealthfront Roth IRA
- Best for access to a financial advisor: Betterment Roth IRA
Roth IRA FAQs
- What's the difference between a Roth IRA and a traditional IRA?
- Can anyone open a Roth IRA?
- How much should I contribute to my Roth IRA?
- Roth IRA taxes vs traditional IRA taxes?
- Roth IRA withdrawals vs traditional IRA withdrawals?
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Best overall
Charles Schwab
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No account minimum for active investing through Schwab One® Brokerage Account. Automated investing through Schwab Intelligent Portfolios® requires a $5,000 minimum deposit
Fees
Fees may vary depending on the investment vehicle selected. Schwab One® Brokerage Account has no account fees, $0 commission fees for stock and ETF trades, $0 transaction fees for over 4,000 mutual funds and a $0.65 fee per options contract
Bonus
None
Investment vehicles
Robo-advisor: Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium™ IRA: Charles Schwab Traditional, Roth, Rollover, Inherited and Custodial IRAs; plus, a Personal Choice Retirement Account® (PCRA) Brokerage and trading: Schwab One® Brokerage Account, Brokerage Account + Specialized Platforms and Support for Trading, Schwab Global Account™ and Schwab Organization Account
Investment options
Stocks, bonds, mutual funds, CDs and ETFs
Educational resources
Extensive retirement planning tools
Pros
- $0 minimum deposit for active investing
- No commission fees for stock and ETF trades and no transaction fees for over 4,000 mutual funds
- Offers extensive retirement planning tools
- Users can get on-demand advice from a professional advisor/Schwab expert
- Robo-advisor Schwab Intelligent Portfolios® available as a no-fee automated service option (with Premium version available for a fee)
- Trading platform StreetSmart Edge® available for more active investors
- 24/7 customer support access by phone or chat
- Charles Schwab offers over 300 brick-and-mortar branches across the U.S. for in-person support
Cons
- Specific transactions may require commission fee
- Robo-advisor Schwab Intelligent Portfolios Premium charges a one-time planning fee of $300, then a $30 per month advisory fee. For that price, you get unlimited 1:1 guidance from a CFP, interactive planning tools, plus a personalized roadmap for reaching your goals
Best for beginner investors eager to learn
Fidelity Investments
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No minimum to open a Fidelity Go account, but minimum $10 balance for robo-advisor to start investing. Minimum $25,000 balance for Fidelity Personalized Planning & Advice
Fees
Fees may vary depending on the investment vehicle selected. Zero commission fees for stock, ETF, options trades and some mutual funds; zero transaction fees for over 3,400 mutual funds; $0.65 per options contract. Fidelity Go is free for balances under $10,000 (after, $3 per month for balances between $10,000 and $49,999; 0.35% for balances over $50,000). Fidelity Personalized Planning & Advice has a 0.50% advisory fee
Bonus
Find special offers here
Investment vehicles
Robo-advisor: Fidelity Go® and Fidelity® Personalized Planning & Advice IRA: Fidelity Investments Traditional, Roth and Rollover IRAs Brokerage and trading: Fidelity Investments Trading Other: Fidelity Investments 529 College Savings; Fidelity HSA®
Investment options
Stocks, bonds, ETFs, mutual funds, CDs, options and fractional shares
Educational resources
Extensive tools and industry-leading, in-depth research from 20-plus independent providers
Pros
- No commission fees for stock, ETF, options trades
- No transaction fees for over 3,400 mutual funds
- Robo-advisor Fidelity Go (free for balances under $10,000)
- Hybrid robo service Fidelity Personalized Planning & Advice
- Limited-time $100 offer
- Abundant educational tools and resources
- 24/7 customer service
- Over 100 brick-and-mortar branches across the U.S. for face-to-face support
Cons
- Fidelity Go fee is $3 per month for balances between $10,000 and $49,999; 0.35% for balances over $50,000
- Fidelity Personalized Planning & Advice requires $25,000 minimum balance and has a 0.50% advisory fee
- Some of Fidelity's mutual funds require reaching specific thresholds
- Reports of platform outages during heavy trading days
Best for hands-on beginner investors
Ally Invest®
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No account minimum for Self-Directed Trading. $100 minimum for Robo Portfolios
Fees
Fees may vary depending on the investment vehicle selected. Self-Directed Trading has zero commission fees for stock, ETF, options trades; $0.50 per options contract. Robo Portfolios have zero management fees
Bonus
You may be eligible for up to $3,000 bonus cash when you open an Ally Invest Self-Directed account
Investment vehicles
Investment options
Stocks, bonds, ETFs, options, mutual funds, margin account and forex trading
Educational resources
Offers informational articles to help users improve their understanding of investment strategies and market trends
Pros
- $0 minimum deposit for Self-Directed Trading
- No commission fees for stock, ETF and options trades
- Includes charts and calculators to help investors analyze their trades
- Robo Portfolios available as automated service option with four different portfolio types to choose from
- Offers informational articles about investment strategies and market trends
- 24/7 live customer service with brokers
Cons
- Robo Portfolios require a $100 minimum deposit
- Mutual funds may require transaction fee
Best for hands-off beginner investors
Wealthfront
On Wealthfront's secure site
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. $500 minimum deposit for investment accounts
Fees
Fees may vary depending on the investment vehicle selected. Zero account, transfer, trading or commission fees (fund ratios may apply). Wealthfront annual management advisory fee is 0.25% of your account balance
Bonus
None
Investment vehicles
Investment options
Stocks, bonds, ETFs and cash. Additional asset classes to your portfolio include real estate, natural resources and dividend stocks
Educational resources
Offers free financial advice for college planning, retirement and homebuying
Pros
- No trade or transfer fees
- Good for automated investing
- Picks investments based on user's risk tolerance and time until retirement
- Offers a cash management checking account with a debit card
- Tax-loss harvesting to reduce the taxes you pay
- Wealthfront Invite Program: When a friend funds an investment or cash account through your invite referral link, you’ll get an additional $5,000 managed for free
Cons
- $500 minimum deposit
- 0.25% management fee
Best for access to a financial advisor
Betterment
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. For example, Betterment doesn't require clients to maintain a minimum investment account balance, but there is a ACH deposit minimum of $10. Premium Investing requires a $100,000 minimum balance.
Fees
Fees may vary depending on the investment vehicle selected. For Betterment Digital Investing, 0.25% of your fund balance as an annual account fee; Premium Investing has a 0.40% annual fee
Bonus
Up to $5,000 managed free for a year with a qualifying deposit within 45 days of signup. Valid only for new individual investment accounts with Betterment LLC
Investment vehicles
Investment options
Stocks, bonds, ETFs and cash
Educational resources
Betterment offers retirement and other education materials
See our methodology, terms apply. Does not apply to crypto asset portfolios.
Pros
- No trade or transfer fees
- Good for automated investing
- Customizes users' portfolios around their financial goals, timeline and risk tolerance
- Users can assign specific investing goals (short- and long-term) to each portfolio and invest using different strategies (less and more risk)
- Quick and easy to set up account
- Able to sync external retirement accounts to your Betterment retirement goal so all your accounts are in one place. Premium plan users get unlimited access to a financial advisor (otherwise, one-time advisor consultations cost a fee ranging from $299 to $399)
- Advanced features include automatic rebalancing, tax-saving strategies and socially responsible investing
Cons
- 0.25% annual account fee
- 0.40% annual account fee for upgraded premium plan
- Premium plan requires $100,000 minimum balance
Roth IRA FAQs
What's the difference between a Roth IRA and a traditional IRA?
A Roth IRA is very similar to a traditional IRA: You can make consistent contributions to your Roth, which will be invested in the market allowing the money to grow over time so you have a healthy savings when you reach retirement age.
But Roth IRAs have a few components that make them stand out from your traditional IRA. Here's what makes them unique:
- When you withdraw your contributions from a Roth IRA in retirement, those withdrawals are generally tax free (as long as your account has been open for at least five years) and they don't count as income. Withdrawals in retirement from a traditional IRA and 401(k) will be taxed as income.
- Contributions into a Roth IRA use after-tax dollars, unlike contributions to a traditional IRA or 401(k), which are not taxed. This may be a bigger hit to your finances in the short term, but your money will grow tax free.
- If you withdraw earnings you've made on investments in a Roth IRA before age 59 and a half, you'll incur a 10% early withdrawal penalty and may be subject to income tax.
- There are exceptions to the early withdrawal penalty on Roth IRAs, including taking out funds for first-time home purchases, college expenses and birth or adoption expenses.
- Your tax filing status and income level determine whether or not you can contribute to a Roth IRA: if married filing jointly, the annual income threshold is below $208,000; if single, the income threshold is below $140,000; if married filing separately and you lived with your spouse, the income threshold is below $10,000.
We dig into these differences a little bit more in the FAQs below.
Can anyone open a Roth IRA?
Only people below a certain income level can open and contribute to a Roth IRA. This is different from traditional IRAs, where anyone can contribute regardless of how much money they earn.
Given the income limits that come with Roth IRAs, high-earners may not be eligible to open or contribute to a Roth IRA. (There is a loophole to this, however, for high-earners to make contributions indirectly through a backdoor Roth IRA.) Here are the specific income thresholds for 2021:
- Married filing jointly or qualifying widow(er): Not eligible if your modified adjusted gross income is $208,000 or more
- Single, head of household or married filing separately (and you didn't live with your spouse at any time during the year): Not eligible if your modified adjusted gross income is $140,000 or more
- Married filing separately (if you lived with your spouse at any time during the year): Not eligible if your modified adjusted gross income is $10,000 or more
How much should I contribute to my Roth IRA?
When deciding how much money to deposit into your Roth IRA, you are limited to a certain amount each year.
Roth IRAs have the same contribution limits as traditional IRAs, which is the below for 2021:
- Those under age 50: Total contribution limit to both Roth and traditional IRAs of up to $6,000
- Those 50 or older: Total contribution limit to both Roth and traditional IRAs of up to $7,000
Roth IRA taxes vs traditional IRA taxes?
With a Roth IRA, you pay taxes on your contributions upfront so you don't have to pay them later when you withdraw money from your retirement fund (as long as your account has been open for at least five years).
This is the biggest difference from a traditional IRA, which lets you delay paying taxes until you withdraw funds later down the road. With traditional IRAs, your contributions are also tax-deductible, up to certain limits, so your contribution reduces the amount you owe in taxes each year.
A good rule of thumb when choosing between the two types of IRA accounts is to consider your tax bracket:
- Choose a Roth IRA if you expect that you'll be making more money in your later years — and thus in a higher tax bracket. It makes more sense to pay taxes today to take advantage of your current low tax rate before it goes up. Plus, since your withdrawals from Roth IRAs don't count as income and aren't taxed after 59 and a half, you can count on every dollar in your account when making withdrawals.
- Choose a traditional IRA if you expect that you'll be making less money in your later years — and thus in a lower tax bracket. In this case, it makes more sense to reduce your taxable income in the present, so in theory you'll pay less in taxes both now and in the future when your tax rate is lower.
Use an online calculator like this one from Charles Schwab to help you decide between a Roth IRA or a traditional IRA.
Roth IRA withdrawals vs traditional IRA withdrawals?
With a Roth IRA, you have much more flexibility when it comes to withdrawing money from your account before you reach retirement.
Withdrawing from your traditional IRA before age 59 and a half comes at a cost. You'll be taxed, in addition to incurring a 10% early withdrawal penalty fee.
But you can withdraw after-tax contributions from your Roth IRA at any age tax- and penalty-free. With earnings, it's a little different.
If you withdraw any earnings you've made on your investments in a Roth IRA before age 59 and a half, you will incur a 10% early withdrawal penalty (and may be subject to income taxes like a traditional IRA). There are some unique exceptions to this early withdrawal penalty on Roth IRAs that include first-time home purchases, college expenses and birth or adoption expenses.
Read more
Our methodology
To determine which Roth IRAs are the best for investors, Select analyzed and compared Roth IRAs offered by national banks, investment firms, online brokers and robo-advisors. We narrowed down our ranking by only considering those that offer commission-free trading of stocks and ETFs, as well as a variety of investment options so you can best maximize your retirement savings.
We also compared each Roth IRA on the following features:
- $0 minimum deposit: Most of the Roth IRAs on our ranking don't have minimum deposit requirements.
- Low fees: We considered each Roth IRA's fees, commission trading fees and transaction fees.
- Bonus offered: Some Roth IRAs offer promotions for new account users.
- Variety of investment options: The more diversified your portfolio, the better. We made sure our top picks offer investments in stocks, bonds, mutual finds, CDs and ETFs. Most also offer options trading.
- A hub of educational resources: We opted for Roth IRAs with an online resource hub or advice center to help you educate yourself about retirement accounts and investing.
- Ease-of-use: Whether accessing your Roth IRA via your laptop at home or on your smartphone while on the go, it's important to have an easy user experience. We noted when an investment platform excelled in usability.
- Customer support: Every Roth IRA on our list provides customer service available via telephone, email or secure online messaging.
After reviewing the above features, we sorted our recommendations by their appeal to beginner investors who are likely just starting out in their careers since Roth IRAs are the most effective retirement savings vehicles if you're in a lower tax bracket.
Your earnings on contributions to a Roth IRA depend on any associated fees, the contributions you make to your account and the fluctuations of the market.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.