Best Roth IRA Accounts for December 2024

Read our Advertiser Disclosure.
Contributor, Benzinga
December 11, 2024

Benzinga's top picks for the best Roth IRA account providers for this month include Charles Schwab and Fidelity Investments.

A Roth Individual Retirement Account (IRA) is an advantageous retirement savings vehicle that allows individuals to contribute after-tax dollars, which can then grow tax-free, leading to potentially significant tax benefits upon withdrawal during retirement. This is particularly beneficial for long-term savers who anticipate being in a higher tax bracket later in their careers, as it allows for more substantial savings without the burden of taxes on withdrawals.

Choosing the best Roth IRA account is essential for maximizing these benefits; look for accounts with low or no fees, robust retirement planning tools, and dependable customer support to ensure a smooth saving experience. Benzinga has reviewed some of the top Roth IRA providers, offering guidance to help individuals select the right account to enhance their retirement savings and secure their financial future.

Quick Look at the Best Roth IRA Accounts of 2024:

Best Roth IRA Accounts

The best Roth IRAs offer investment options and guidance to help with retirement savings. Here’s a look at the leading options for the best place for IRA Roth account this month.

1. Best for Holistic Approach to Retirement Savings: Charles Schwab IRA

Enjoy access to a variety of investment vehicles with your Roth IRA account, including stocks, bonds, certificates of deposit (CDs), exchange-traded funds (ETFs) and mutual funds. Charles Schwab is a leader in investing because it offers simplified trading techniques with tax-efficient advice. Schwab also offers valuable resources, such as educational tools and personalized guidance, to help investors navigate their retirement planning effectively. You can learn about your risk and make investment updates accordingly to form a powerhouse account that will help you live the way you want to in retirement.

Why We Picked It: Charles Schwab Roth IRA account comes with support like tax calculators and real-time market data. This can help you make more informed decisions about when to buy, sell or hold onto your investments. Plus, you'll have access to retirement specialists who are ready to help you with any questions or concerns you may have about your Individual Retirement Account. 

2. Best for $0 Minimum to Get Started: Fidelity Investments

While you might see the value that a Roth IRA can have, you also might not have the upfront cash required to get started with most investment banks. But with Fidelity Roth IRA, you can open your account and fund it slowly as you have the money. The platform also offers flexibility in how you manage your individual retirement account, including robo-advisor, self-directed or advisor-guided. If you have any questions, Fidelity Investments offers helpful articles and features to guide you in your retirement planning. Plus, their Intuitive and interactive chatbot can answer many basic questions fast and 24/7.

Why We Picked It: With no account minimums and no maintenance fees, Fidelity Investments allows users to contribute to their Roth IRA with flexibility, encouraging even small contributions that can grow significantly over time with tax-free earnings. It also provides a user-friendly platform with account features and support tailored for beginners and those looking to enhance their investment skills.

3. Best for Account Type Options: Merrill Edge

Enjoy the freedom to invest in a variety of investment types, including stocks, ETFs and options. You can choose between a self-directed account or a guided investment account. If you choose guided, you can use the robo-advisor or an actual advisor. Regardless of the account type you select, you’ll have access to retirement calculators and insights to help you in planning for retirement, such as how much you’ll need for retirement. Customer service is available 24/7.

Merrill Edge has partnered with Bank of America to allow customers to manage all their financial assets in one place, providing a seamless experience for those with accounts at both institutions.

Why We Picked It: Merrill Edge Roth IRA offers tools and resources for hands-on investors to make informed decisions and effectively manage portfolios. It has a user-friendly interface, educational materials and diverse investment options for active investment participation.

4. Best for Hands-Off Investing: Betterment

Some people just want to place money in an account and know that it is the best investment option based on their needs. If that sounds like you, Betterment is a great option to open an individual retirement account. When your Roth IRA account has less than $20,000 in it, you’ll pay a $4 per month fee. After that, it’s 0.25% annually until you reach $100,000, at which point you’ll pay an additional 0.15%. But with those fees comes access to Certified Financial Planners (CFP). Automate your retirement strategy with the tools Betterment provides.

Betterment currently offers a 1% match on traditional and Roth IRA contributions to enhance retirement savings, encouraging consistent saving and helping clients achieve financial goals. This match allows investors to maximize their contributions, significantly compounding over time and improving retirement readiness.

Why We Picked It: Betterment Roth IRA offers a convenient and hassle-free way to save for retirement. By automating your investment strategy and leaving the heavy lifting to Betterment's algorithms, you can enjoy peace of mind knowing that your retirement savings are in good hands.

5. Best for Robo-Advisor Account: Wealthfront

Wealthfront is one of the leading robo-advisors in the industry. While the account does not offer access to a traditional advisor, Wealthfront provides the tools you need to get started investing your assets yourself. Fill out a questionnaire to help inform your risk tolerance and begin trading funds in up to 12 asset classes. Get access to a variety of investment vehicles, including ETFs, real estate investment trusts (REITs) and stocks.

Why We Picked It: The goal-tracking feature helps you see where you are with saving and whether you need to make adjustments to your contributions.

How a Roth IRA Works

A Roth IRA allows you to place after-tax dollars into an individual retirement account. You won’t enjoy any tax savings for that year, but you can grow your investment tax-free and withdraw the funds tax-free starting at age 59½ as long as the account has been open for five years.

Roth IRA accounts are best for people who expect to be in a higher tax bracket during retirement. That way, you can pay your taxes on the funds now to maximize tax savings. Passing your account to heirs also offers them tax-free withdrawals, which can be a nice perk when passing inheritance.

You will not be required to take distributions at a certain age, which means you can hold the funds and keep growing them tax-free until you need them. If you need the funds before age 59½, you can use them toward a first-time home purchase, health insurance, higher education, medical expenses, disability claims, IRS tax levy payments and more.

How Do Roth IRAs Differ from Traditional IRAs?

Roth IRA accounts have after-tax contributions and are better for those expecting to be in a higher tax bracket in retirement, while traditional IRA accounts have pretax contributions and are better for those expecting to be in a lower tax bracket. Both have contribution limits, but Roth IRAs have income limits that can decrease contribution maximums. Additionally, Roth IRA accounts have no mandatory distributions, while traditional accounts require distributions starting at age 73.

Here's an overview of how Roth IRA differs from Traditional IRA and 401(k).

FeaturesRoth IRATraditional IRA401(k)
Tax benefitsTax-free growth and qualifying withdrawalsTax-deferred growth and tax-deductible depositsEmployer-sponsored savings, save & invest pre-tax earnings
Age requirementsNo requirementMust be under 70½ years old to contribute21 years old
Contribution limits$7,000 for those under 50 years old, $8,000 for those 50+$7,000 for those under 50 years old, $8,000 for those 50+Employees can contribute up to $23,000 (not including employer match)
Income limitsDepends on marital status and adjusted gross incomeNoNo
Taxes on withdrawalNoYesYes
Taxes on depositsYesNoNo
Early withdrawal penaltyYes, pay taxes on amount plus 10% penaltyYes, in some cases a 10% penaltyYes, pay a penalty
Required withdrawalsNoYes, by age 70½Yes, by age 70½

How Much Do You Need to Open a Roth IRA?

The good news is that you don't need a lot of money to open a Roth Individual Retirement Account. In fact, many financial institutions allow you to open a Roth IRA with as little as $50 or $100. This low initial investment requirement makes Roth IRAs accessible to a wide range of individuals, regardless of their income or financial situation.

However, just because you can open a Roth IRA with a small amount of money doesn't mean that's all you should contribute. The annual contribution limit for Roth IRAs is currently $7,000 for individuals under the age of 50, and $8,000 for individuals aged 50 and older. If you can afford to contribute the maximum amount each year, you'll be able to maximize the tax benefits and savings potential of your Roth IRA. Regular and consistent contributions are recommended for a Roth IRA to build a substantial retirement nest egg.

Maximizing Your Tax Advantages With a Roth IRA

The most influential reason to open a Roth IRA is to maximize your tax advantages. When you believe your tax bracket will be higher in retirement or you want greater flexibility for when you’ll take distributions from your account, go with a Roth Individual Retirement Account.

Frequently Asked Questions

Q

What is the best company to do a Roth IRA?

A

Some of the best companies to open a Roth IRA include Charles Schwab and Wealthfront, both are well-known for their strong track record in the investment industry. Reddit users also recommend Fidelity Investments and Vanguard Roth IRA.

Q

What is the five-year rule for a Roth IRA?

A

You cannot withdraw from a Roth IRA until it has been open for at least five years, even if you’ve reached the 59½ age requirement. That’s known as the five-year rule.

Q

What type of fund is best for Roth IRA?

A

The best type of fund for a Roth IRA is usually one that offers a diversified portfolio of low-cost index funds or exchange-traded funds (ETFs). The best IRA fund can help maximize long-term growth potential while keeping fees and taxes to a minimum.

Q

How much will a Roth IRA grow in 20 years?

A

The growth of a Roth IRA over 20 years depends on factors such as initial investment amount, annual contributions, rate of return, and fees. Consistent contributions to a diversified portfolio can lead to significant growth, with monitoring and adjustments recommended to maximize potential and take advantage of compounding interest. Consulting a financial advisor can help in creating a strategy to achieve growth goals.

Rebekah Brately

About Rebekah Brately

Rebekah Brately is an investment writer passionate about helping people learn more about how to grow their wealth. She has more than 12 years of writing experience, focused on technology, travel, family and finance. Her work has been published in Benzinga, Hearst Bay Area, FreightWaves and Dallas Observer publications.