Note: Some of these promotions won’t apply for first-time depositors, due to IRA contribution limits of $6,500 in 2023 ($7,500 if age 50 or older) and $7,000 in 2024 ($8,000 if 50 or older). We’ve included promotions with low deposit requirements where available.
How do I choose an IRA account?
Picking the best IRA account will depend a bit on what matters most to you. Below we detail some criteria to keep in mind, but don’t forget that the most important thing is to get started saving for retirement. The sooner you get started, the better off you’ll be. Before decision paralysis slows you down, consider simply opening an account at one of our top picks — we’ve done hours of research already.
Here are some important criteria to keep in mind as you pick the best IRA account:
Low-cost investments: For long-term retirement savings success, make sure high fees don’t eat into your investment returns. Open your IRA at a broker or robo-advisor that offers low-cost investments. For many retirement investors, a smart investment is a low-cost mutual fund. Investing in a handful of mutual funds is an easy way to own a diversified portfolio, because each mutual fund invests in dozens, hundreds or even thousands of companies. With mutual funds, one of the main fees to focus on is the expense ratio. Ideally, you’re investing in mutual funds with an expense ratio of less than about 0.5%.
Low fees: While you’re keeping an eye on expense ratios, also keep other fees in mind. If you’re a do-it-yourself investor who plans to open an IRA at a broker, make sure you pick a broker with no trading commissions (or a high number of commission-free ETFs and no-transaction-fee mutual funds) and low transfer and other fees.
Investment help: If you want guidance picking investments, a robo-advisor likely is a better choice for you than a broker. All robo-advisors offer either ready-to-go investment portfolios or provide some help picking investments.
Customer support: Make sure the broker or robo-advisor offers customer support that meets your needs, whether that’s live chat, telephone support or access to human financial planners.
What is the difference between a traditional IRA and a Roth IRA?
There are a few differences between these accounts, but the main way they differ has to do with taxes:
A traditional IRA earns you a tax deduction on contributions for the year they are made. You’ll then pay income taxes on the distributions you take in retirement. Because you’re delaying taxes until retirement, the investment growth in a traditional IRA is tax-deferred.
A Roth IRA offers no tax deduction when you make contributions, but qualified distributions in retirement are not taxed. That makes the investment income in a Roth IRA tax-free — you won’t pay taxes on it at all, so long as you wait until retirement to access it.
Generally, a traditional IRA is best if you expect your tax rate to be lower in retirement than it is now — by putting off taxes until retirement, you’ll pay that lower rate. If you expect the opposite to be true — your taxes are lower now and will be higher in retirement — you may want to choose a Roth IRA.
How do I open an IRA?
It’s a simple process: You can open an IRA online, at any broker or robo-advisor (though we’re partial to the ones above, for the reasons we outlined). It takes about 15 minutes and you’ll need to provide some personal information, including your name, birthdate, mailing address and Social Security number. Here’s our guide to opening an IRA, which also includes information about how to fund and invest the account.
What is the IRA contribution limit?
In 2023, the IRA contribution limit is $6,500, or $7,500 for those 50 and older. In 2024, that rises to $7,000 ($8,000 for those 50 and up). That’s a combined limit shared by the two types of IRA — you can have both a Roth and a traditional IRA, but that maximum limit applies to all of your IRA contributions combined. But the contribution limit doesn’t include amounts rolled over, such as from a 401(k).
Which bank has the best IRA?
You might have noticed we don’t include any bank savings IRA accounts in our roundup of the best IRAs. Generally, an investment broker or robo-advisor is a better option than a bank for an IRA account, because for a long-term goal like retirement you want to tap into the power of the stock market to grow your money.
Bank IRAs generally offer access to savings products such as certificates of deposit. CDs are savings products that guarantee a rate of return as long as you leave your money in for a specific period of time. Historically, stock market returns average about 10% a year. CD rates are typically much lower. Yes, the stock market comes with the risk that, in any given year, your account may lose value — but investors who leave their money in the market, even through those down days, generally enjoy hefty gains over time.
If, despite that, you decide to go with a bank CD, be sure to pick among the IRA accounts with the best IRA CD rates so you know you’re getting the best possible rate of return for that type of account.