Best Roth IRA Account: A Beginner's Guide to Opening a Roth IRA

IRAs are great for building long-lasting retirement savings, but Roth IRAs stand out for their robust tax advantages, withdrawal flexibility, and high earning potential. Start saving for retirement with a Roth IRA from a top brokerage to access quality planning services, after-tax growth, and automatic rebalancing for long-term wealth.

Below, we've listed our top picks for who has the best Roth IRA accounts, as chosen by our Business Insider editors in 2025.

Best Roth IRA Accounts

• Charles Schwab: Best Roth IRA Overall
• Merrill Edge: Best for Active Investors
• Betterment: Best for Passive Investors
• SoFi Invest: Best for Beginners
• Robinhood: Best Rollover Bonus

Featured Roth IRA Providers

Roth IRA Overview

Roth IRAs are individual retirement accounts funded by after-tax dollars (aka already taxed money). Because of this, the withdrawals you make later in life are not subject to taxes, making it the best retirement plan if you expect to be in a higher tax bracket during retirement than you are today.

Unlike the best IRA accounts, contributions to a Roth IRA are not tax-deductible, so you won't get the initial benefit of tax-deferred income.

That said, one of the best perks of a Roth IRA is that you can withdraw your original funds (minus any gains) from your account without penalty, essentially making it an emergency fund. This flexibility can prove especially beneficial for investors with tight budgets. 

Roth IRA Pros and Cons

Roth IRA Benefits

• Tax-free withdrawals: One of the best Roth IRA benefits is tax-free withdrawals in retirement. As your account grows, you won't pay extra taxes on what it earns, nor will you be taxed when you withdraw the funds later on in retirement.
• No required minimum distributions: There are no required minimum distributions (RMDs). Even once you reach age 72, you can leave the funds to keep growing or contribute more if you'd like.
• Flexible withdrawals: Roth IRA withdrawal rules are that the money you've contributed to the account at any time, with no penalty at all. However, while contributions can be withdrawn penalty-free, earnings on those contributions can't.
• Inheritance by heirs: You can also use Roth IRAs to provide for your dependents after your death as part of your estate plan. Should that happen, your heirs can withdraw from the account without paying additional tax.

Roth IRA Drawbacks

• Not available to high-income earners: You are not eligible to contribute to a Roth IRA if your household income exceeds the maximum annual limit of $165,000 for individuals or $246,000 for married couples.
• Contribution limits: Contribution limits for Roth IRAs are lower than some other retirement plans, like a 401(k). This limits how much of your income can benefit from tax-free grow and compound interest.
• Five-year rule: The Roth IRA 5-year rule requires contributions to be at least five years old before retirees can withdraw contributions and earnings penalty-free, regardless of age.

Steps to Prepare to Open a Roth IRA

Are you considering opening one of the best Roth IRAs to reach your retirement goals? Here's how to get started.

1. Determine Your Eligibility

While there are no age requirements for opening a Roth IRA, you must have earned income within the year to contribute.

Contributing to an IRA from a young age is a great way to gradually increase your savings with long-term investment opportunities and the power of compound interest. However, your ability to contribute to a Roth IRA hinges on your modified adjusted gross income (MAGI).

In 2025, single tax filers must have a MAGI under $165,000 to be eligible for a Roth IRA account, and married couples filing jointly must make less than $246,000.

If you exceed the income limits, consider a backdoor Roth IRA, also called a Roth IRA conversion. This strategy allows high-income taxpayers to get tax-free growth and withdrawals in retirement by converting money held in a traditional IRA to a Roth over several years.

Read more on Roth vs. traditional IRAs »

2. Decide How Much to Contribute

You can contribute up to $7,000 to a Roth IRA in 2025. If you are age 50 or older, you can contribute an additional catch-up contribution of $1,000.

Some of the best online brokerages with IRAs offer an IRA match. This is similar to a 401(k) employer match, except the bank or brokerage contributes rather than your employer. IRA providers match a percentage of each dollar you contribute to your Roth IRA, usually 1% to 3% of your contributions, but matched funds don't count toward your annual limit.

3. Gather Necessary Documents

Make sure you have the following documentation and information to open a Roth IRA:

• A copy of your government-issued ID, such as a driver's license or passport
• Your personal information, including your name, phone number, address, date of birth, and Social Security number
• Details on your beneficiaries or whom you'd like to inherit the account when you die
• Your preferred contribution method
• Banking information (if you want to fund the account with an electronic transfer) or information on your other 401(k) or IRAs (if you're doing a rollover)

Choosing the Right Financial Institution

Before you can open a Roth IRA, consider what type of financial institution you want to open your account with.

Types of Financial Institutions

Here are the different types of financial institutions to consider opening your Roth IRA with.

Banks

Most banks offer traditional and Roth IRAs to their customers. Sometimes, banks require an existing checking or savings account before you can open an IRA with them. Having your IRA and bank account on the same platform makes contributing retirement savings simple.

However, you may not get access to as many investment opportunities or trading features.

Credit Unions

Opening a Roth IRA through a credit union is only recommended for pre-retirees who want to invest a significant portion of their retirement savings in high-yield CDs.

However, credit union IRAs are more limited regarding investment options and brokerage services.

Online Brokerage

Online brokerages are suitable for passive or active investing strategies. Brokerages offer full-service management and may have a wider selection of investments. If you want the most economical option, consider looking for brokers with low or no account fees and various commission- and fee-free investment options.

Robo-Advisors

Robo-advisors are generally best for a hands-off investing approach. The best robo-advisors come with low management fees, risk-based investment options, automatic portfolio balancing, and other perks. Robo-advisors can often be managed using an online dashboard.

Factors to Consider Before Opening a Roth IRA

Not all IRA accounts are built the same. Some IRA offerings are objectively better than others. Don't open your Roth IRA with the first financial institution you stumble across.

Avoid basing your decision entirely on fees or commissions. While choosing an affordable solution is important, other factors should also play a role, including your tech-savvy level, investment know-how, the institution's investing minimums, and the service it's known for.

"Consider the overall service you'll be receiving," says Heather Welsh, CFP and senior vice president of wealth planning at Sequoia Financial Group. "While robo-advisors are generally inexpensive, your level of comfort with technology might suggest taking a different direction and talking with your bank or financial advisor."

Opening Your Roth IRA Account

"How you open an account will depend on your selected IRA provider or advisor," Welsh says. "If you take the do-it-yourself approach, you can likely do it online. If you work with a bank or advisor, you will be provided with forms to open the account, either electronically or in hard copy, depending on their processes and your preferences."

Whether doing the opening process online or in person, ensure you have all the necessary documentation and information.

How to Choose the Best Roth IRA Account

The best place to open a Roth IRA for your needs depends on your financial situation and savings goals. For instance, if you expect to pay more in taxes as you get older, a Roth IRA could be more suitable than a traditional IRA. This is because you'll pay immediate taxes on any contributions you make.

Consider the following when choosing a top-rate Roth IRA provider:

• Investment choices: Consider the variety and types of investments, such as stocks, ETFs, mutual funds, and bonds.
• Fees: Compare account fees, trading commissions, and expense ratios for mutual funds and ETFs.
• Platform and tools: Evaluate the Roth IRA's user-friendliness, available research and educational resources, and additional tools like retirement planning tools, retirement calculators, and portfolio analysis.
• Customer service: Research the provider's reputation and accessibility for customer support. The place to open a Roth IRA offers 24/7 customer support through email, online chat, blog posts, and over the phone.
• Additional features: If you value automatic rebalancing, fractional shares, or access to financial advisors, consider these.

How to Fund Your Roth IRA

Once your IRA has been established, you can begin making contributions.

• Link a bank account: You may be able to link your bank account and directly transfer funds. "As a general rule, I'd say the more you can add to your retirement funds, the better off you'll be in the future," says Scott Staton, RICP and founder of Staton Financial Group.
• Rolling over funds from a 401(k): If you roll funds over from a 401(k) or another retirement, you'll also have some forms to fill out. The best rollover IRAs send the money directly to your new IRA account. Others may send you a check, which you must deposit into the new IRA yourself. Typically, the whole process takes anywhere from two to four weeks.
• Rolling over funds from a traditional IRA: If you roll over funds to a traditional IRA, you won't need to pay taxes on the funds until you start making withdrawals. If you roll over funds to a Roth IRA, though, you'll owe taxes on the rolled-over amount when you file your annual returns.
• Rollover check: If you receive the rollover check directly, make sure to deposit it quickly. If you fail to deposit your rollover funds within 60 days, it will qualify as a withdrawal and could mean a penalty if you are not of retirement age.

Selecting Investments for Your Roth IRA

After you've funded your account, you can begin investing.

Types of Investments

"One important thing to understand is, an IRA isn't an investment, nor does it pay a particular rate of return," Staton says. "What determines the rate of return and level of risk of an IRA are the investment choices you make within it."

There are many investment options, including:

• Stocks: Stocks allow you to purchase ownership shares of publicly traded companies.
• Bonds: Bonds are debt securities that offer money to investors and, often, the government. They're one of the lowest-risk investments you can make.
• Mutual funds: Mutual funds are investment pools made up of many different investments. They're managed professionally, and individual consumers can buy shares in the fund.
• Index funds: Index funds are stock portfolios that aim to match the returns of a specific market index, such as the S&P 500.
• ETFs: Exchange Traded Funds, or ETFs, are baskets of securities that track an index, like the S&P 500, similar to index funds. These can be traded throughout the day on the stock market.
• Target-date funds: Target-date funds operate with a certain retirement year in mind. As you approach that date, the investments shift, reducing your risk and exposure to loss.

You don't have to choose just one type of investment. You can — and should — diversify your portfolio with investments in several types of securities. Portfolio diversification reduces your exposure to risk. One way to easily diversify your portfolio is with low-cost ETFs.

Risk Tolerance and Investment Horizon

Understanding how risk and volatility affect your investment portfolio is crucial to reaching your investment goals and protecting your savings. Riskier asset classes are appealing because they offer the potential for higher returns. You can review the historical returns of different asset classes to see the level of risk and volatility involved.

A general rule of thumb is that you should gradually invest in less risky investments as you near retirement age. Investing in a Roth IRA is no different. Younger investors, such as those in their 20s and 30s, have more time to recover from any significant losses than investors in their 50s.

Your personal preference, retirement goals, and estimated retirement age may also affect the level of risk you take in your portfolio. Consult a financial advisor to help you allocate your Roth IRA assets according to your needs.

Managing Your Roth IRA

Like any investment account, Roth IRAs require ongoing review and management to ensure you're on track to meet your retirement goals. You can manage your Roth IRA by regularly monitoring your portfolio's investments and rebalancing as you see fit.

Since retirement planning is a long-term investment strategy, this doesn't mean checking every day — once or twice a year should be enough. Otherwise, you may get distracted (or scared) by natural fluctuations in the market.

Some people use a Roth IRA as a tax-advantaged savings account or emergency fund since you can withdraw your original contributions (not including the growth) penalty-free at any time. However, leaving the funds in your account alone for as long as possible is the best practice to build long-term wealth and get the maximum benefit of compound interest.

Talk to one of the best online financial advisors or a Certified Financial Planner for expert guidance and advice. Financial advisors can provide advice personalized to your exact goals and finances.

Best Roth IRA Accounts to Open

Charles Schwab IRA: Best Roth IRA Overall

SoFi IRA: Best Roth IRA for Beginners

Robinhood IRA: Best Roth IRA Rollover Bonus

Betterment IRA: Best Roth IRA for Passive Investors

Merrill Edge IRA: Best Roth IRA for Active Investors

Why You Should Trust Us: Our Expert Panel on The Best Roth IRA Accounts

We interviewed the following three retirement and investing experts for our guide to the best Roth IRA accounts:

• Charlotte Geletka, CFP, CRPC, managing partner at Silver Penny Financial Planning
• David Brooks, CIS, CHRS, founder and president at Retire SMART
• Tanya Nichols, CFP, founder and president at Align Financial

We're focusing on what makes a Roth IRA account most useful. When comparing accounts, it's important to consider fees, investment choices, retirement planning resources, and more. Here's what they had to say about Roth IRA accounts. (Some text may be lightly edited for clarity.)

What are the advantages and disadvantages of opening a Roth IRA?

Charlotte Geletka, CFP, CRPC:

"Since its inception, many mass media personalities will tell you that the Roth is the only way to go. The Roth IRA is not one size fits all. Roth IRAs [work] best for people who either A) have a very long time horizon until retirement or B) are in a low tax bracket now and plan to be in a higher tax bracket in retirement."

David Brooks, CIS, CHRS:

"The big advantage that many people don't realize is [that] you can get access to your money at any time with no penalty whatsoever. So if you contribute to a Roth IRA, and you are younger than 59 ½...if you come up on an emergency [and] you need to pull your money back out, you're always entitled to pull out your contributions with no tax and no penalty."

Tanya Nichols, CFP:

"One of the downsides of Roth IRAs is that they're not available to everyone. Individuals earning more than $161,000 annually (in 2024) and married couples earning more than $240,000 may not be eligible to make full contributions, which diminishes the potential benefits." 

What makes a Roth IRA account good or not good?

Charlotte Geletka, CFP, CRPC:

"If you have a Roth IRA in retirement, it is a great way to take distributions without increasing your tax bracket and utilize tax planning strategies. A Roth IRA is a really powerful retirement savings tool, but it is not one size fits all. That's why it is a great idea to speak to a financial advisor."

David Brooks, CIS, CHRS:

"The Roth has huge advantages for younger investors over a traditional IRA. The myth is that you'll be in a lower tax bracket when you're retired, so that's why the traditional side is so popular. But I can tell you, from two-plus decades of doing retirement-specific planning, that's a lie."

Tanya Nichols, CFP:

"A Roth IRA is not inherently good or bad. Like all financial vehicles, the pros and cons should be considered in light of each person's financial circumstances and objectives. The benefits can vary meaningfully depending on your income, age, current tax rate, and future prospects."

Who should open a Roth IRA account?

Charlotte Geletka, CFP, CRPC:

"Young people who have a long time horizon to let the money grow. It also works well for people who have less income now but anticipate a significant increase in salary as they advance in their career."

David Brooks, CIS, CHRS:

"Everyone. And I mean everyone. There's some confusion behind who can have a Roth IRA as well. Some people believe [that] because they don't have any income, or they have too much income, they're not entitled to have a Roth IRA. That is incorrect."

Tanya Nichols, CFP:

"If you think your future tax bracket will be higher than your current tax bracket and you can maximize your contributions to a Roth IRA based on your current income level, you're likely to benefit from the tax-free withdrawal feature in retirement.

"It's not a great tool unless it's really designated for long-term retirement savings."

Is there any other advice you'd offer someone who's considering opening a Roth IRA?

Charlotte Geletka, CFP, CRPC:

"Another cool thing about a Roth is that you have until April of the following year to see if you are eligible to contribute to a Roth and have the additional savings to contribute to a Roth."

David Brooks, CIS, CHRS:

"Understand what the fees and expenses are going to be on your account. There is nothing wrong with paying for quality advice, but do not open an account with a commission-based broker. I think you would rather use a fiduciary."

Tanya Nichols, CFP:

"Before you decide which savings tool you're going to use - make sure you have a savings account of up to 90 days of living expenses set aside, and that you don't have any revolving credit card debt.  Good habits about spending are just as important (maybe even more) than saving.

"Make sure that you know that the money you're putting aside is money that should be set aside for a really long time."

Methodology: How We Chose the Best Roth IRAs

We used Business Insider's methodology for rating investment platforms when reviewing online brokers that offer 401(k) rollovers to find the best platforms for investment options, low fees and minimums, portfolio types, human advisor access, and customer service. 

We also favored platforms offering various other features and products, such as tax-loss harvesting, robo-advisor access, and market research. Investment platforms are given a rating between 1 and 5.

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