When it comes to retirement, choosing the right online broker for self-directed trading is very important for long-term success. A retirement account is your nest egg for the future, and whether it is a Traditional IRA, Roth IRA, or even a SEP IRA, this broker guide will help you choose the best broker for your retirement account.
In the process of selecting a broker, we recommend choosing one that does not charge any miscellaneous IRA fees: a yearly maintenance fee, a fee for opening the IRA, or a fee for closure should you decide to move your money elsewhere.
Best IRA Accounts for 2020
Here are the top five online brokers for IRA retirement accounts, based on over 80 variables.
- Charles Schwab - Best for IRA accounts overall
- Fidelity - Great all-around retirement experience
- TD Ameritrade - Excellent all-round offering
- Merrill Edge - Best rewards program
- E*TRADE - Balanced offering
Best for IRA accounts overall - Open Account
Current Offer: $0 online stock, ETF, and options commissions at Schwab.
For investors seeking access to $0 stock and ETF trades, excellent research, quality trade tools, and professional planning for the future, Charles Schwab will not disappoint. Charles Schwab is our number one pick for IRA accounts and broader retirement investing thanks to its combination of excellent IRA account options, including optional robo-advice and on-demand advice from Certified Financial Planners (CFPs). Read full review
Great all-around retirement experience
From industry-leading research for stocks, funds, and bonds to excellent education and retirement tools for calculating your retirement readiness and tracking your progress towards retirement, Fidelity delivers a terrific IRA experience. Stock trades are $0 per trade, Fidelity charges no miscellaneous fees for IRA accounts, and value is present throughout the journey towards retirement. Read full review
Excellent all-round offering - Open Account
Exclusive Offer: Get up to $600 and trade commission-free with TD Ameritrade.
While not our top pick for IRA accounts, TD Ameritrade finished #1 overall in our 2020 Review. TD Ameritrade offers no-fee IRAs and charges $0 for stock and ETF trades. Even better, TD Ameritrade offers the best selection of investment education, which every investor needs while saving and planning for retirement. Read full review
Best rewards program - Open Account
Current Offer: Invest in a new account and get up to $600.
Backed by parent company Bank of America, Merrill Edge delivers $0 stock and ETF trades with fantastic research and customer service. Better yet, for current banking customers, Merrill Edge's Preferred Rewards program offers the best rewards benefits across the industry. Merrill Edge is our top pick in 2020 for investors looking to managing banking and brokerage under one roof. Read full review
Balanced offering - Open Account
Promo Offer: Get $100 when you deposit just $5,000 into a new E*TRADE account!
E*TRADE provides a variety of research tools and educational resources for investors saving for retirement with an IRA account. Unfortunately, the areas most important to IRA accounts, such as research and education, are also areas where E*TRADE trails its closest competitors. That said, E*TRADE's IRA account experience will undoubtedly satisfy the majority. Read full review
IRA account features comparison
When considering an IRA account, assessing the features of each brokerage is an important step. StockBrokers.com has the largest database covering the online brokerage industry. Some features and fees to check include: minimum deposit, IRA annual account fee, IRA account closure fee, retirement education, and educational videos.
Here's an IRA account comparison for Charles Schwab, Fidelity, Merrill Edge, and TD Ameritrade. To compare all miscellaneous account fees and trading features, use the online brokerage comparison tool.
|Feature||Charles Schwab||Fidelity||TD Ameritrade||Merrill Edge|
|Stock Trade Fee (per trade)||$0.00||$0.00||$0.00||$0.00|
|ETF Trade Fee||$0.00||$0.00||$0.00||$0.00|
|IRA Annual Fee||$0.00||$0.00||$0.00||$0.00|
|IRA Closure Fee||$50.00||$0.00||$0.00||$49.95|
|No Fee IRAs||Yes||Yes||Yes||No|
|Has Education - Retirement||Yes||Yes||Yes||Yes|
How to select an IRA account
Before opening your new retirement account, consider these five tips for success:
1. Be sure to choose a broker with no IRA fees. Fees may include an annual fee for simply having the account, a fee for opening the account, or a fee for closing it. None of the brokers we recommend, charge these types of fees, so no need to worry. If anything, you should take advantage of the current offers and get a bonus for opening a new account.
2. Understand the difference between retirement account types. Should you go with a traditional IRA or a Roth? With a Traditional IRA, all contributions are tax-free, while withdrawals are taxed, as opposed to a Roth IRA, where contributions are taxed up front and thus are tax-free in the end. A more detailed breakdown of differences is set out below.
3. Choose an online broker that is right for you. Online brokers come in many different shapes and sizes, so choosing the right one is important because, after all, this is for your retirement! Alongside reviewing the above broker recommendations, consider reading our best online brokers guide and navigating through our full online broker reviews here on the site.
4. Start your retirement account early to maximize returns.The younger you are when you open and begin contributing to your IRA, the longer your portfolio will grow without being taxed. Saving at a young age allows returns to compound over time, offering you a significant benefit over any non-retirement brokerage account.
5. Understand how to roll over your 401k to an IRA: To roll over any retirement account, click to open an account with the broker you decide on, select retirement account and IRA under type, and complete the application. From there, follow the instructions provided, including contacting your 401k provider to let them know you are doing a rollover, then fund your new IRA broker account online. Be sure to take your time with the application process.
What securities can I trade with an IRA account?
Unlike 401ks, which have a preset list of investments (mutual funds in most cases) available to trade, you can trade stocks, ETFs, mutual funds, bonds, and even basic options in an IRA account. The reason IRA accounts are more flexible is because they are individual based and not provided by your employer.
Can I use margin in an IRA account?
No. You cannot trade with margin in an IRA account. To access margin and trade with leverage, you have to use a traditional, taxable brokerage account. Margin trading is restricted in IRA accounts because it is considered too risky.
Do I have to pay fees each year to maintain an IRA account?
In most cases, no. In the United States, most brokers charge no annual maintenance fees for having an IRA account. Some brokers will charge a closure fee when you close the account, but even that is rare among the biggest, most well-known brokerages. Contrarily, outside of the United States, it is very common to pay fees for having a retirement account with an online brokerage. This is especially true in the UK.
To compare all miscellaneous account fees, use the online brokerage comparison tool.
Can you lose all your money in an IRA account?
Absolutely. IRA accounts are like any other brokerage account, you are investing your money into securities such as stocks, ETFs, and mutual funds. All securities carry some degree of risk. That said, you invest in lower risk securities like bonds or money market funds, then your risk of losing all your money will be far lower.
What is a Traditional IRA?
A Traditional Individual Retirement Account (Traditional IRA) presents both tax advantages and investment opportunities. With a Traditional IRA, contributions are tax deductible, meaning you do not pay any taxes on funds contributed each year. Furthermore, all earnings over the course of the account's life are tax-deferred until you start withdrawing for retirement. With a Traditional IRA, you can contribute up to $6,000 per year under the age of 50, and $7,000 per year if 50 or older. However, any withdrawals before the age of 59 and a half are subject to an early distribution penalty of 10%. See this Wikipedia page for more information.
What is a Roth IRA?
With a Roth IRA, contributions are all post tax, which means withdrawals during retirement are tax-free. Contribution limits are the same as IRAs. However, Roth IRAs are not available to everyone. Instead, higher income earners are locked out of using this retirement instrument. Unlike Traditional IRAs, with a Roth IRA funds may be withdrawn at any time after a "seasoning period" (currently five years). See this Wikipedia page for more information.
What is a SEP IRA?
A SEP IRA, Simplified Employee Pension Individual Retirement Arrangement, is a traditional IRA modified to be used by business owners for themselves. Contributions are capped at $56,000 per year in 2019 and are tax deferred, like a Traditional IRA, meaning distributions during retirement are taxed. The rationale for taking out a Traditional IRA or SEP IRA instead of a Roth IRA is that during retirement, income levels will be much lower than they are currently; thus, the effective tax bracket is lower, saving money overall.
What is a 401(k)?
A 401(k) is a type of retirement account American employers offer their workers. As a tax-deferred investment account, employees can contribute up to $18,500 pre-tax every year in 2019. Withdrawals are taxed during retirement. 401ks often include incentives from employers to contribute, with the most common being contribution matching (the US average is 2.7%). Different variations of profit sharing can also be incorporated, although they are less common. When an employee leaves his or her current company or retires, he/she is required to roll over the funds into a new employer's plan or roll over the funds into an IRA. See this Wikipedia page for more information.
For the StockBrokers.com tenth annual best online brokers review published in January 2020, a total of 3,540 data points were collected over six months and used to score brokers. This makes StockBrokers.com home to the largest independent database on the web covering the online broker industry.
Participation is required to be included. Each broker completed an in-depth data profile and provided executive time (live in person or over the web) for an annual update meeting. Our rigorous data validation process yields an error rate of less than .001% each year, providing site visitors quality data they can trust. Learn more about how we test.
Still aren't sure which online broker to choose? Email us a question! Whether you are a beginner investor learning the ropes or a professional trader, we are here to help. Email us your online broker specific question and we will respond within one business day.