Are you looking to beef up your retirement game? Or maybe you want to find a place to roll over a 401(k) from an old employer? Either way, an individual retirement account (IRA) can be a great tool to use.
Most people choose either a traditional IRA or a Roth IRA, both of which come with distinct tax benefits. There are other types available, particularly if you’re self-employed, but these two are ideal options for most people.
Which type of IRA is best?
Traditional IRAs let you defer paying taxes on your contributions until you withdraw. With Roth IRAs, you pay taxes the year you make your contribution. When it comes time to retire, you can withdraw your funds tax-free.
Once determine what kind of IRA you want (and check that you qualify for one), you need to find a company where you can open an account. There are countless options available. In fact, you could probably even go with the bank where you keep your checking and savings accounts.
But don’t just jump on the first IRA company you find. Fees, account minimums, and available investment vehicles can vary widely. It’s smart to compare several options to ensure you’re getting everything you need out of your IRA company.
Want to take a shortcut in your research?
Best IRA Accounts
Check out our top 7 picks for 2023‘s best IRA accounts. Let’s examine each one so you can decide quickly and easily which is best for you.
Charles Schwab offers one of the best IRA accounts available thanks to its superior customer service. The company offers 24/7 customer support as well as extensive resources about retirement planning.
Merrill Edge is one of the best brokerages for hands-on investors. The company is owned by Bank of America, so it’s a great option for anyone who is already a customer of the bank.
Betterment works to automate and simplify the investment process and offers traditional, SEP, rollover, and Roth IRAs. This robo-advisor makes managing your IRA extremely hands-off while helping you save money on excessive fees.
Ally Invest is a great option if you’re just starting to build out your IRA rather than rolling over existing funds. It’s also directed to individuals who want to manage their own investments.
Wealthfront is a robo-advisor that’s growing quickly. Your first $10,000 is managed for free. Thereafter, you’re charged an annual management fee of 0.25%, regardless of how much you have in your account.
E*TRADE offers a ton of financial products, and their IRA offerings are straightforward with low fees.
When it comes down to picking your IRA account, two of the most important factors are cost and your preferred management style. The two generally go hand in hand.
Do you want a DIY IRA that lets you do your own trading? You’ll need to compare online brokers and robo-advisors that offer free trades or lower-cost trade fees based on your trading activity.
Prefer a hands-off style? Think about how much money you’re likely to invest in the near term. Then, pick an IRA account that lets you go on autopilot while charging a flat annual fee.
For these types of IRA accounts, you’ll definitely want to dig deeper into how the financial advisors’ portfolios are chosen and whether their investment styles agree with your own.
Having any type of IRA can help you prepare for retirement. You can always transfer or roll over your funds into another IRA. However, choosing the best account in the first place can help prevent unnecessary fees.
And once you’re ready to retire, you’ll have a healthy nest egg helping you to finance your daily expenses.