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Best IRA Accounts

For beginning investors, it’s easy to get hung up on investing when you’re not sure where to put your money or how to begin.

There are literally thousands (millions?) of options, and I think that’s what makes this investment stuff so overwhelming, even for those of us who know the differences between a traditional IRA and Roth IRA. But the biggest advantage you’ll have is just to get started: Do something. Now.

Recommended IRA - Ally Invest

Ally Invest has a No-Fee IRA that includes 90 days of free trades with a $5,000 deposit. However, there is no minimum to open an account with Ally, and they will even pay transfer fees from another IRA provider should you chose to grow your retirement account with Ally.

Ouick-look – our favorite IRA providers:

Don’t walk, run to your HR office right now, especially if you’re missing out on free money by not taking advantage of your company match. Your HR office will able to connect you with a representative who can help you select the right funds for you, and ask you questions about your specific retirement timeline and objectives in order to help you select the best funds for you.

What if your employer doesn’t offer a plan? You’re going to need to research your own IRA options. Again, thousands of options are open to you. It can be so darned intimidating, can’t it? I’d advise you to take a deep breath, not be bullied by all the options and take a look at some of these tips:

How much should I invest?

As much as you possibly can. Twenty percent would be absolutely magnificent.

I know, any more than three percent seems impossible these days (how will I pay my mortgage?)—but remember, every little bit helps you for your future.

And if you can max out your plan? You’d be potentially doing yourself a multimillion-dollar favor later on down the road. How can you afford not to do that for yourself?

Annual Maximums

Luckily, the annual maximum contribution levels for retirement savings are pretty high for those of us punching in the ol’ clock from nine to five. The IRS says the contribution limits for 401(k) contributors are $18,000 in 2017. However, if you’re 50 and older, you can take advantage of the catch-up provision and plunk in $6,000 for 2017.

For IRAs in 2017, you can make annual contributions of $5,500, and the catch-up contribution is $1,000.

The Roth IRA contribution limit is the same as that of IRAs, at $5,500, but there are some income limitations with the Roth, as you may already know. Your income has to be between $118,000 and $133,000. For married filers, that income threshold starts at $186,000 and ends at $196,000.

Make your retirement contributions automatic

This is a MUST-DO: Make your contributions automatic. Have money sent directly from your checking account to your IRA every month, so you don’t have to think about it at all and (hopefully) won’t even miss the money. If at all possible, aim to max out your plan.

All of that said, here are some great online brokerage options for those of you who are self-employed, who would like to set up a Roth in addition to your 401(k), or for whatever reason other than the fact that you’d like to plan well for your future:

Best overall: TD Ameritrade

Best for experienced investors: TD Ameritrade

Best for beginners: Scottrade

Cheapest option: Ally Invest

Why are these brokerages the best for IRAs?

Put simply, these three companies are at the top of the list because they go above and beyond industry standards. They’re trusted household names, an obvious necessity when your nest egg is on the line. They offer a depth and breadth of products, pack a punch with their customer service options, and don’t miss the mark in providing a boatload of educational opportunities through their websites and platforms.  

Best overall and best for experienced traders: TD Ameritrade

Reasons to open a TD Ameritrade account:

  • IRAs offered include traditional IRA, Roth IRA, rollover IRA, SEP IRA, SIMPLE IRA, individual 401(k) (for small business)
  • Fees (including IRA set-up fee, IRA annual fee, maintenance fee and IRA termination fee) are $0
  • There is no minimum opening deposit required
  • TD Ameritrade’s IRA selection wizard, IRA calculators and Roth conversion analyzer are great for those who love all things techy

One strike against TD Ameritrade:

  • Higher trading fees compared to others, such as Ally Invest

Best for beginners: Scottrade

Reasons to open a Scottrade account:

  • IRAs offered include traditional IRA, Roth IRA, rollover IRA, SIMPLE IRA, SEP IRA, 401(k) plans, defined benefit, money purchase, Keogh DVP
  • Fees (including IRA set-up fee, IRA annual fee, and termination fee) are $0
  • Scottrade offers excellent professional investment advice, perfect for beginners (you can pay extra for Scottrade Investment Management for even more personal retirement management advice)
  • IRA selection wizard and two retirement calculators are a boon for beginning investors, who may not know where to start

One strike against Scottrade:

  • Scottrade requires a $2,500 minimum initial deposit

Cheapest option: Ally Invest

Reasons to open an Ally Invest account:

  • Extremely low commissions and fees
  • Easy-to-use trading tools
  • Website accommodates beginning investors and advanced traders
  • Low-cost professional portfolio management
  • Purported excellent customer service

One strike against Ally Invest:

  •  A $50 fee is implemented when you invest in an IRA right from your brokerage account

Now, You Choose

Once you decide on a brokerage firm, and depending on your situation, now it’s time to decide which type of IRA you want to put your money into so it starts workin’ for you. Put simply, here are two great options:

You can fund a traditional IRA. A traditional IRA, or individual retirement account, allows you to contribute pre-tax dollars (up to $5,500 a year, or $6,500 a year if you’re 50 or older). You pay taxes when you withdraw the money once you retire, meaning that it’s tax deferred.

If you earn taxable income and are under age 70 ½, you can contribute. Easy-peasy. Plus, since you have no retirement plan at work, you can put money in and deduct the entire amount from your taxes.

You can fund a Roth IRA. A Roth IRA, named after the guy who created them, has a bit of a restriction. You must be making less than $112,000 a year, and if you’re married, your combined income must be less than $178,000 a year in order to contribute.

However, the benefit to a Roth is that you don’t pay taxes on it when you withdraw your money at retirement—you pay the taxes up front. The annual contribution limit is up to $5,500 a year for a Roth IRA.

For the self-employed, never fear. Here are some other fantastic options:

You can fund a Simplified Employee Pension, or SEP IRA: You can contribute as much as 25 percent of your net earnings from self-employment up to $54,000. Isn’t that awesome? There’s something to be said for the self-employed. Your ticket to wealth can be that much quicker, if you have the resources.

Check out a Solo 401(k): Sometimes called a Solo-k, Uni-k, One-participant 401(k) or One-participant k, the Solo 401(k) option allows participants to pony up money as both an employee and employer.

The self-employed can contribute elective deferrals up to 100 percent of compensation—up to $18,000, plus employer non-elective contributions up to 25 percent of compensation.

Try out a SIMPLE IRA if you have employees who work for you: SIMPLE stands for Savings Incentive Match PLan for Employees and it allows employees and employers to contribute to traditional IRAs for employees. It’s available to any small business with 100 or fewer employees.

You, as the employer, are required to pony up a matching contribution up to three percent of compensation or two percent of non-elective contribution for each eligible employee.

Employees can choose whether or not they’d like to participate, and the employee always has 100 percent ownership of all SIMPLE IRA money. They may defer up to $12,500 and employees over age 50 can make a catch-up contribution of up to $3,000.

Now, follow through!

If you made it through all that technical jargon, good job. It’s even more essential that you read, digest this information, and actually do it.

Maybe this will motivate you (nothing motivates some people more than a compound interest table). Check out what $100 per month can do for you at a rate of 12 percent (now, I know that 12 percent is quite high, but the concept is still the same, whether your rate is eight percent or ten.)

Time Value Time Value
5 years $8,167 30 years $349,496
10 years $23,004 35 years $643,096
15 years $49,958 40 years $1,176,477
20 years $98,926 45 years $2,145,469
25 years $187,885 50 years $3,905,864

If your employer doesn’t offer you a retirement plan, it takes even that much more initiative to open up your own IRA. If you can’t decide, it’s better to just choose a fund, already!

Best of all, most of the time, it’ll take you 20 minutes, tops, if you have your checking account numbers open in front of you, your Social Security number and your beneficiaries’ Social Security numbers handy.

One last tidbit: Don’t sign up for a particular retirement plan just because your next-door cubicle neighbor Joe signed up for the same one. Your situation may be completely different from Joe’s (not to mention, if you’re 20 years younger than Joe, your portfolio should look much different).

That’s why assistance is available and you should take advantage of it, and with those three brokerages at your disposal, you won’t miss a beat.

Broker Best For Commissions Account Minimum Choose your platform
TD Ameritrade
  • Beginner investors
  • Advanced traders
  • Investors who want portfolio-building advice.
$6.95 $0
Get started securely through TD Ameritrade's website
1 Minute Review

This publicly listed discount broker, which is in existence for over four decades, is service-intensive, offering intuitive and powerful investment tools. Especially, with equity investing, a flat fee is charged, with the firm claiming that it charges no trade minimum, no data fees, and no platform fees. Though it is pricier than many other discount brokers, what tilts the scales in its favor is its well-rounded service offerings and the quality and value it offers its clients.

  • Superior technology
  • No account minimum balance
  • Excellent customer support
  • Premier data and news partnerships
  • Slightly higher commissions
  • Can be for more advanced users
Current Promotion

Trade commission–free for 90 days & get up to $2500

Ally Investment
  • Active traders
  • Beginners looking to start trading
  • Low fees
  • Penny stocks
$4.95 volume discount available $0
Get started securely through Ally Investment's website
1 Minute Review

If investors are on the hunt for a bargain broker, Ally Invest could be the one. With low commissions across the board, Ally Invest (formerly TradeKing) stops potential investors in their tracks with its especially low mutual fund commissions. Commissions on stocks and ETFs are notoriously inexpensive as well, and for more active traders or those with larger account balances, commissions can dip as low as $3.95 per trade.

  • Volume discounts available
  • Among the lowest fees in industry
  • Good for every experience level
  • Excellent customer service
  • No commission free ETFs
  • Lacks physical locations
Current Promotion

$3.95 per stock trade for Active Traders at Ally Invest