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Best IRA Accounts 2022

One of the primary options to save for retirement is through an individual retirement account (IRA). Not only do IRAs feature advantageous tax benefits, but the best online brokers and robo-advisors compliment your retirement accounts with analysis and planning tools so you can feel more confident about your retirement readiness. 

Our extensive research to determine the best IRA providers focused on retirement planning tools, goal setting, reporting features, and eliminating additional IRA management fees. All these factors taken together can help ensure your retirement savings are as optimized as possible. We’ll explore the top IRA platforms together so you can choose the option that best fits your needs.

Best IRA Accounts:

Fidelity Investments

  • Account Minimum: $0
  • Fees: $0 for stock/ETF trades, $0 plus $0.65/contract for options trade
Read full review

Fidelity stands out as an IRA provider for its low costs, exceptional tools, and the breadth of investment management choices on the platform. You’ll also have flexibility to tailor your retirement savings journey to your preferences by selecting from advisor driven, self directed, or automated portfolio management strategies. Regardless of which route you go, Fidelity’s tools, calculators, and reports are built to be impactful and easy to use.

Retirement savers at all planning stages and investment experience will find that Fidelity’s combination of retirement planning features and educational content will keep you well positioned to stay on track. If you’re just starting your retirement savings journey, Fidelity can provide tools and planning based on your timeline, goals, and investment preferences. Those near or at retirement will be able to leverage withdrawal calculators and factor in social security distributions to build a robust income strategy. Fidelity has consistently improved its offering to add even more useful features for retirement savers over time.

IRA Account Types:

Pros

  • No IRA account minimums

  • Full complement of IRAs account types are available

  • Self-directed, advisor driven, or automated IRA options

  • Extensive library of educational and retirement planning content

Cons

  • No crypto, commodities or futures trading

  • Non-U.S. citizens or residents prevented from opening an account

  • Some tools and features challenging to find given the menu setup

Charles Schwab

  • Account Minimum: $0
  • Fees: Free stock and ETF trading, $0.65 per options contract
Read full review

Schwab’s comprehensive product ecosystem combines an expansive array of trading tools and investment options that make the platform a strong option for retirement savers. With a full suite of IRA account types available, you’ll decide whether to leverage the Intelligent Portfolios robo-advisor offering, work directly with a financial advisor, or go with a self-directed strategy for your retirement journey. A helpful advice section has tools and calculators geared towards retirement savers of any age, readiness, or experience level to make sure you’re on track.

Where Schwab really shines, however, is through extensive ETF screening filters, which feature over 150 selection criteria including socially responsible investing (SRI) options. Of particular interest to IRA account holders is a screener for closed-end funds which have the potential to generate additional retirement income. These features allow you to ensure your retirement savings closely align with your investment allocation preferences.

IRA Account Types:

  • Traditional IRA
  • Roth IRA
  • Rollover IRA
  • Inherited IRA
  • Custodial IRA
  • Simplified employee pension (SEP) IRA
  • Self-employed 401(k)
  • SIMPLE IRA
  • 401(k) plan for small businesses
  • Personal defined benefit plan
  • Company retirement account (CRA)
Pros

  • Full suite of IRA account types

  • Extensive ETF screening capabilities and analysis

  • Choose from self-directed, advisor managed, or no-cost robo-advisor Schwab Intelligent Portfolio options

Cons

  • Mutual fund fees and margin rates are higher than some competitors

  • Limited crypto trading, separate futures platform, no FX trading

  • Schwab Intelligent Portfolio has $5,000 minimum, $25,000 for premium

Merrill Edge

  • Account Minimums: $0
  • Fees: $0 per stock trade. Options trades $0 per leg plus $0.65 per contract
Read full review

Merrill Edge has a strong variety of retirement-focused educational content and investment tools, making it an ideal spot to have an IRA account. Merrill Edge’s full integration with Bank of America also allows for additional personalized portfolio analysis that incorporates retirement accounts held between both institutions. You’ll also be able to tailor your retirement strategy with your need for financial guidance, including the option to select from self-guided, robo-advisor, and financial advisor experiences.

Merrill Edge’s Portfolio Story feature in particular is an innovative tool that helps self-directed investors better understand their portfolio and investment decisioning. The feature is personalized to your asset allocation while also delivering your investment goal progress in an easy-to-understand format, even providing detail on environmental, social, and governance (ESG) impact. Ultimately, this aspect gives you unique customization ability and insight for your retirement strategy.

IRA Account Types:

  • Traditional IRA
  • Roth IRA
  • Rollover IRA
  • Inherited IRA
  • Simplified employee pension (SEP) IRA
  • Self-employed 401(k)
Pros

  • No IRA account minimums for self-directed accounts.

  • Personalized portfolio analysis includes any Bank of America accounts

  • Outstanding retirement tools and tailored education content

Cons

  • Merrill Edge has limited complex options trading, which may not be ideal for investors that rely on this strategy

  • Merrill Guided Investing has a $1,000 minimum

  • Merrill Guided Investing with Advisor has a $20,000 minimum

Wealthfront

  • Account Minimum: $500
  • Fees: 0.25% for most accounts, no trading commission or fees for withdrawals, minimums, or transfers.
Read full review

On Jan. 26, 2022, Wealthfront announced that it has agreed to be acquired by one of the premier brands in wealth management, UBS, in a transaction valued at $1.4 billion. In a blog post on the company’s website, David Fortunato, Wealthfront’s chief executive officer, said, “You will see no change to your experience and can look forward to benefiting from UBS’s breadth of products, services, and intellectual capital. Rest assured that nothing will change with your account or the cost of our service. We will continue delivering great products and features to you, now at a much faster pace. And you’ll get access to even more research and insights that can empower you as an investor.”

Goal setting, progress tracking, and digital planning is where Wealthfront shines, making the robo-advisor an excellent place for retirement-focused investors. Wealthfront also launched innovative features such as Path and Self-Driving Money which lets you allocate excess cash automatically towards your goals. By pairing these features with a comprehensive suite of investment management tools, you’ll have a powerful resource at your disposal to help manage your IRA and retirement strategy.

Wealthfront further stands as a robust retirement planning option by offering external account aggregation so you can view your financial situation holistically in one place. As your financial picture changes, the aggregation also helps ensure that life changes and impacts are properly factored into your overall plan. This is an especially important aspect for holistic planning and analysis so you can better understand the likelihood of reaching your retirement goals. 

IRA Account Types:

  • Traditional IRA
  • Roth IRA
  • Rollover IRA
  • Simplified employee pension (SEP) IRA
Pros

  • Excellent digital financial planning and goal setting features for retirement assistance

  • Path and Self-Driving Money tools provides further money management automation by allocating excess cash towards goals

  • External account aggregation allows for holistic retirement analysis

Cons

  • No self directed or human financial advisor investment management options

  • IRA account types limited to traditional, rollover, Roth, and SEP

  • Portfolios under $100,000 are not customizable beyond risk settings

M1 Finance

  • Account Minimum: $100 ($500 minimum for retirement accounts)
  • Fee: 0%
Read full review

M1 Finance provides an intriguing blend of automated investing paired with far-reaching portfolio customization geared towards users looking to automate their retirement investments while aligning allocation preferences, risk appetite, and diversification goals. Within your IRA you can select from more than 80 pre-built portfolios called “pies” (a reference to portfolio pie charts) or build your own strategy. M1 also is committed to limiting your cost, charging no fees on investment management or trading which puts more dollars to work for you.

While M1 Finance excels in cost containment, you won’t find much in the way of goal planning and financial calculators since the focus is on automating portfolio management for experienced investors. Similarly there is no access to human consultants as this is not an advisory offering.  Still, M1 Finance provides a great option for self-directed investors looking for help in automating retirement investment management without sacrificing portfolio flexibility and control.

IRA Account Types:

  • Traditional IRA
  • Roth IRA
  • Rollover IRA
  • Simplified employee pension (SEP) IRA
Pros

  • Extensive portfolio customization options for retirement investing

  • No fees for trading or account management

  • High level of portfolio control through self-directed investing or from long menu of pre-built allocations

Cons

  • No access to financial advisors

  • Limited financial calculators, tools, and goal planning

  • No external accounts aggregation for investment or retirement planning purposes

Betterment

  • Account Minimum: $0
  • Fees: 0.25% (annual) for digital plan, 0.40% (annual) for the premium plan 
Read full review

Betterment is one of the premier players in the robo-advisor space and a great platform if your  goal is to automate your IRA investment strategy while maintaining some portfolio flexibility. Betterment also excels as a planning-based provider by offering a wide variety of goal setting tools and progress trackers, including external account aggregation so you can view your full retirement picture. As an example of Betterment’s focus on retirement planning, you’ll receive a prompt to set more funds aside if the system notes you’re behind on retirement goals. 

While investment options are limited to exchange traded funds (ETFs), portfolios are adjustable to reflect risk preferences and retirement goals. A dedicated retirement allocation can be found in Betterment’s Income Portfolio that is geared around providing cash flow. SRI portfolios are also available, along with human financial advisors for added guidance at an additional cost. With a solid catalog of educational tools rounding out the experience, Betterment is one of the top places to have an IRA.

IRA Account Types:

  • Traditional IRA
  • Roth IRA
  • Rollover IRA
  • Inherited IRA
  • Simplified employee pension (SEP) IRA
Pros

  • No IRA account minimums

  • Seamless onboarding and IRA account setup, full portfolio transparency before funding

  • Aggregation of external retirement accounts for more complete goal setting and planning

  • Adjusting portfolio to match changing goals and risk tolerances can be done easily

Cons

  • No fully self directed retirement investment management option

  • High fees for human advice compared to similar offerings ($199 – $299 per consultation)

  • Investment options limited to ETFs, no margin or borrowing

  • Premium plan requires $100,000

How Do IRAs Work?

An individual retirement account (IRA) is simply an account that allows you to make contributions for the purpose of saving for retirement. The contributions to these accounts are either tax-deferred or tax-exempt. With tax-deferred accounts like the traditional IRA, you can claim a deduction for amounts contributed to your IRA, thereby reducing your taxable income in a given year up to the IRA contribution limits set by the Internal Revenue Service (IRS). When you start withdrawing funds from a traditional IRA in retirement, however, these distributions are taxable income. 

With tax-exempt IRAs, like the Roth IRA, you contribute after tax-dollars that aren’t taxed when withdrawn in retirement. If you are expecting to have a large income in retirement due to other investment portfolios, cash flowing assets, company pensions, and so on, then a tax-exempt IRA becomes a more attractive retirement vehicle even though it doesn’t provide an immediate tax deduction through your current contributions. 

What Type of IRA Should I Open?

There are many flavors of individual retirement accounts, as well as spousal and custodial IRAs. Choosing between them for most people will come down to whether you qualify for and want a tax deduction now (traditional IRA) or you want tax-free distributions in retirement instead (Roth IRA). These two types of IRA are available from all the brokers mentioned above. Choosing between them depends on whether you are covered by other plans or expect to have a high income into retirement. 

There are also some IRA types that are meant for people who run businesses. The simplified employee pension (SEP) IRA allows an employer to set up IRAs for themselves and their employees. As the name implies, this type of IRA is simplified to allow for easy administration and flexible contributions. Savings incentive match plan for employees (SIMPLE) IRAs are also available for employers where a traditional 401(k) plan isn’t an option, but the business owner wants something more formal than a SEP IRA. Last, a solo 401(k) is meant for business owners who don’t have employees and allows them to make both the employer and employee contributions to the plan to maximize contributions and deductions.

If you aren’t running a business, however, you are most likely going to be opening either a Roth IRA or a traditional IRA depending on your personal financial situation.

Which IRA Is Tax-Deferred, Which Is Tax-Deductible, Which Is Tax-Exempt, and What Is the Difference?

The most common question when it comes to IRAs is whether you can deduct it on your taxes. The short answer is that contributions to a traditional IRA are tax-deductible in the year they are made and the money grows tax-deferred. For 2022 and 2021 tax years, for example, your traditional IRA contribution limit is $6000 ($7000 if you are 50 or older). The deduction you can claim depends on your modified adjusted gross income (MAGI), your marital status, and whether you are covered by another plan at work. In general, as your income goes up, the deduction disappears.

Contributions to a Roth IRA are tax-exempt, not tax-deductible or tax-deferred. The contribution limits on the Roth IRA are the same as a traditional IRA, but the contributions cannot be used to reduce your taxable income at all. Instead, the money you put in a Roth IRA is after-tax dollars that can later be withdrawn tax-free as long as you follow the requirements (essentially that the Roth IRA has been accumulating for more than five years and you are over 59 and a half when you make the first distribution).

Simply put, a tax-deductible IRA is one where you can reduce your taxable income in a given year by making contributions, but you will have to claim the distributions in retirement as taxable income—you are deferring the taxes instead of eliminating them. A tax-exempt IRA is one where you contribute after-tax dollars without receiving a deduction and instead are able to receive tax-free distributions in retirement.

Methodology

Investopedia is dedicated to providing investors with unbiased, comprehensive reviews and ratings of online brokers. Our reviews are the result of six months of evaluating all aspects of an online broker’s platform, including the user experience, the quality of trade executions, the products available on their platforms, costs and fees, security, the mobile experience and customer service. We established a rating scale based on our criteria, collecting over 3,000 data points that we weighed into our star scoring system.

Click here to read our full methodology.

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