An individual retirement account (IRA) is one of the few accounts that lets you invest money without paying taxes on earnings, dividends, and capital gains every year. Like its sibling, the 401(k), IRAs are designed to put as much compounding power into your retirement savings as an untaxed dollar can get.But don't be fooled: An IRA is only as good as the place you keep it. You may have no say in choosing your company's 401(k) provider, but the broker who powers your IRA is a choice no one can make but you. It can come with a bit of anxiety -- "who has the lowest fees?" "who has the best mutual funds?" -- but it's a decision we at The Ascent have had to make ourselves, and one we hope this guide can help you too.With that in mind, let's cover our favorite IRA providers and see which ones might be ideal for your retirement savings.

3 Featured Picks From Our Best IRA Accounts

There are a lot of options to compare, even on this page. It can be overwhelming! If you're looking for a place to start, here are three IRA accounts our experts recommend and why they like them:

• Robinhood: Great IRA brokerage app
• SoFi Active Investing: IRA brokerage with low brokerage fees
• Fidelity: Standout IRA account for ETF and mutual fund investing

Reviews of the Best IRA Accounts

Fidelity

Best for: User-friendly, no-frills IRA accounts

Investors who want a full-featured brokerage account for their IRA need look no further than Fidelity. Fidelity offers all major IRA accounts -- traditional, Roth, and SEP -- no-commission mutual funds (including Fidelity's own), access to international stock exchanges, and the ability to buy fractional shares of stocks.Unique among IRA providers, Fidelity has an extensive network of "Investor Centers" where you can sit down with a financial planner and discuss your goals. But even if face-to-face consultations make you cringe, Fidelity's robo-advising service for IRAs is powerful and free when your account balance is below $25,000.

Pros

• Easy-to-use mobile platform
• No account minimums or fees
• Over 10,000 mutual fund options

Cons

• 0.35% robo-advisory fee for balances above $25,000
• No crypto trading

SoFi Invest

Best for: Low account fees and no-fee robo-advising

Investors who need a traditional, Roth, or SEP-IRA and want a high-tech, fully integrated financial app to manage their investments and banking needs should take a look at SoFi Invest. With no minimum deposits, the ability to buy fractional shares of stock, and a user-friendly platform, SoFi is an especially good choice for investors who want to get started and open IRA accounts for their retirement savings.Of all the brokers on this list, SoFi has one of the best robo-advising services for its IRA accounts. Not only does it charge zero advising fees for all investors but the minimum deposit to open an IRA with a robo-advisor is set at an uber-low $1. This makes it perfect for passive investors who are just starting out and don't have a lot of capital to invest with.SoFi will also match 1% of your contributions to your IRA. Only offers made via ACH are eligible for the match. ACATs, wires, and rollovers are not included. Offer expires 12/31/23.SoFi is most appropriate for investors who want to invest in stocks and ETFs, as the platform doesn't currently support mutual funds and bonds. This might make SoFi a poor IRA provider for investors nearing retirement who want to balance high-risk investments, like stocks, with lower risk options.

Pros

• No minimum deposits
• No fees for IRA robo-advising service

Cons

• No mutual fund trading
• No bond trading

Robinhood

Best for: Stock and ETF investors who want a 1%-3% match

Robinhood is perhaps the most unusual IRA provider on this list. Traditionally a trading platform for active investors, Robinhood recently launched its first IRA product, which has all the features of a conventional IRA, except for one twist: every IRA contribution you make, Robinhood will match between 1% to 3%, with no cap.

Yes, you read that right. Robinhood is currently the only IRA provider who will match a portion of your contributions. For Robinhood Gold members ($5 a month), you'll get a 3% match, while everyone else will get 1%. That means, if you contribute $6,500 in your IRA in 2023, Robinhood would deposit $195 for Gold members and $65 for everyone else.But there is a catch: you have to keep contributions in your IRA for at least five years from the date you deposit them or pay a fee equal to the match. That shouldn't be a problem for most IRA investors, but it's something to keep in mind.Beyond that, the stock broker is a great fit for IRA investors who want a robust trading app and are interested in stocks and ETFs. For those who want to buy mutual funds or trade options, you might want to look elsewhere, as Robinhood does not offer either investment in its IRA accounts.

Pros

• Instant deposits into IRA accounts
• 1%-3% match on all IRA contributions with no cap

Cons

• No SEP or inherited IRA option
• No options or crypto trading
• "Early IRA match removal fee" charged when you withdraw IRA contributions before five years

E*TRADE

Best for: Fully staked mobile platform

E*TRADE is a favorite IRA provider among hands-on investors and options traders, both for its robust mobile platform and its trading tools and educational resources.

E*TRADE offers many different retirement account types, charges no commission or transaction fees for mutual funds, and even has a network of physical branch offices for investors who need face-to-face guidance. For IRA investors who don't want to choose individual stocks and funds for themselves, E*TRADE offers a terrific robo-advisor platform as well.

Pros

• Powerful trading platform and mobile app
• $0 online stock, mutual fund, and ETF commissions
• Branch network

Cons

• Fewer mutual funds than other brokers
• Robo-advising service charges 0.30% advising fee and requires $500 minimum
• Limited forex trading

Merrill Edge® Self-Directed

Best for: Hands-off retirement savers

Merrill Edge is a solid choice for those whose primary goal is to save for retirement, as the broker has copious resources on retirement and wealth planning. It's also a great fit for Bank of America customers, as the bank owns Merrill and the investment side is well integrated with the bank.The seamless experience between viewing an IRA alongside other Bank of America products (like home loans, savings accounts, and CDs) can be appealing for IRA investors seeking a simple, unified perspective on their finances. But in comparison with other IRA providers, Merrill Edge's fees are higher for its robo-advising service (0.45% annually, plus a $1,000 account minimum), plus its selection of mutual funds is also weak in comparison to other brokers.

Pros

• Robust retirement planning tools and resources
• Wealth management branches for in-person consultation
• Fee-free mutual fund trading

Cons

• Selection of mutual funds is small
• Robo-advising service has a $1,000 account minimum and 0.45% fee
• Minimum account balance of $20,000 for online advisor services

Ally Invest

Best for: Mutual fund investors

Investors who love mutual funds should look no further than Ally Invest. Not only does the broker offer the largest selection for IRA accounts (over 12,000), but it has eliminated its $9.95 transaction fee for all mutual funds. That's right. You can now trade all of Ally Invest's mutual funds transaction-fee free.

Speaking of fees, Ally Invest doesn't charge commission fees for stocks, ETFs, and options. The broker will also waive the fee on its robo-advising service as long as you hold at least 30% of your portfolio in cash. Otherwise, the annual robo-advisor fee is 0.30% for IRA accounts, which is still low compared with other brokers.Ally is a full-service bank as well, so it could be a smart choice for investors who want to keep their IRA and accounts at the same institution.

Pros

• Huge selection of mutual funds
• No transaction commissions or transaction fees for stocks, ETFs, options, and mutual funds
• Full-service bank

Cons

• Limited tools and research for active traders
• Need to keep 30% of portfolio in cash to waive 0.30% robo-advisor fee

Charles Schwab

Best for: Retirement planners

Charles Schwab offers everything you'd expect from an IRA provider, plus in-person guidance at one of its 340 branch offices. Its platform caters well to retirement planning with plenty of resources and guides on how to prepare your finances for the golden years.In addition to retirement planning help, Charles Schwab's IRA accounts also allow you to buy plenty of no-commission mutual funds, many of which have $0 minimums to get started. It's also perfect for investors who want their IRA at the same institute as other banking products, like checking accounts and credit cards.

Pros

• No minimum investments for mutual funds
• Excellent customer service and in-person consultation
• No fees on robo-advising service

Cons

• Lack of advanced educational materials and trading tools
• High minimum of $5,000 for robo-advising

Vanguard

Best for: Fund investors who want low fees

As the inventor behind the index fund, it's no surprise Vanguard's IRA accounts are excellent choices for fund investors. Vanguard offers thousands of no-transaction-fee mutual funds, including its own low-cost index funds (which are rarely on fee-free lists elsewhere). It also has one of the lowest robo-advisor fees on this list (0.20% to 0.25% annually), though the minimum investment is set comparatively high at $3,000.One potential drawback to Vanguard is that many of its mutual funds have a minimum investment of $3,000. That can make the broker less ideal for beginning investors who don't have a lot of capital. The broker also doesn't have many robust trading tools or charts, which could disappoint active traders.

Pros

• Large selection of unique funds
• Robo-advisor fee waived for the first 90 days

Cons

• High minimum investments for mutual funds
• $25 account fee if you want paper statements ($0 for e-delivery of statements)

J.P. Morgan Self-Directed Investing

Best for: Mutual fund investors

J.P. Morgan Self-Directed Investing is actually a self-directed brokerage account and a robo-advisor (J.P. Morgan Automated Investing) in one. You can have a self-directed trading account where you pick your own IRA stocks, ETFs, mutual funds, and more, and can also allocate some of your money to an automated strategy all in the same account.

There's a lot to like about the J.P. Morgan Self-Directed Investing account for IRA investors. The platform offers no minimum deposit requirement, as well as commission-free trading, both of which have become rather common, but also offers some unique perks. Most notably, J.P. Morgan Self-Directed Investing is one of the only brokers on our radar with no mutual fund commissions whatsoever. Many rivals have a "no-transaction-fee," or NTF, list that offers certain funds without commissions, but with J.P. Morgan, all mutual funds are commission-free.

It can also be an excellent choice for existing Chase customers, as you can link your new J.P. Morgan IRA with your Chase bank accounts, credit cards, as well as other investment accounts, all on the same platform.Of course, J.P. Morgan Self-Directed Investing isn't right for everyone's IRA needs. For one thing, it doesn't offer specialized IRAs for self-employed people, such as the SIMPLE IRA and SEP-IRA. It lacks the advanced trading tools of some rivals on its platform. And investors cannot buy fractional shares of stock in their accounts.Despite these shortcomings, J.P. Morgan Self-Directed Investing could be a solid choice for your new or existing IRA, especially if investing in mutual funds is a big part of your retirement savings strategy.

Pros

• No minimum for self-directed investing
• $0 commissions for stocks and ETFs
• No transaction-fee mutual funds

Cons

• Limited account types
• Weak trading platform
• Robo-advisory services are more expensive than many competitors

What to consider when picking the best IRA for you

When picking the right IRA, it really comes down to how active you'd like to be with your investments, what types of securities you're interested in, and how much retirement planning guidance you want. For instance, if you're a hands-on investor who wants to trade stocks frequently, Robinhood's no-fee trades might be best for you. On the other hand, if you're interested in mutual funds, Ally Invest and Vanguard might be worth looking at.As you're comparing IRA providers, here are a few things to look for:

• Low commission and trading fees: This is especially important if you plan to trade frequently. Most brokers no longer charge fees for trading stocks and ETFs, but look closely at mutual funds and options to understand how much you might be charged.
• Investment options. IRA providers typically let you invest in stocks and index funds, but may not offer mutual funds or options contracts.
• Retirement planning resources: If your goal is to save for retirement, make sure the IRA provider is committed to helping you get there. This could mean having a library fully stacked with retirement guides. Or it could mean having wealth planning tools, like calculators, that can help you stay on track.
• In-person consultation. Some brokers, like Merrill Edge and Fidelity, will provide face-to-face retirement planning. If this is important to you, check to see if the broker has a branch near you.

What is an individual retirement account (IRA)?

An individual retirement account (IRA) is a tax-advantaged investment account you can use to save for retirement. One of the biggest benefits of an IRA is that, unlike a 401(k), it isn't tied to your employer, and it offers a more flexible way to invest money for the future.

Some investors think of an IRA as a tax-efficient container for holding investments. In practice, that's all it is -- an account in which you can hold investments and enjoy tax benefits that you wouldn't receive if you used an ordinary brokerage account. The trade-off is that the account is designed to be used for retirement, so you lose the tax benefits if you withdraw money before a retirement age of 59 1⁄2.

How to open an IRA account

Once you've decided on an IRA provider, opening an account will be simple. In general, here's what you can expect:

1. Choose an IRA type. For example, traditional, Roth, or SEP (for more information on IRA types, read below).
2. Verify your identity. You'll disclose some personal information -- like your Social Security number, driver's license number, and date of birth -- to prove you're really you.
3. Link your bank account and start investing. This will help you fund an IRA if you're starting from scratch. Alternatively, you might be able to transfer an IRA from one provider to another, usually for a fee.

Types of IRAs

IRAs come in different types, each designed with slightly different tax rules and contribution limits. With that in mind, let's look at the three most common types offered by IRA companies.

1. Traditional IRA

Traditional IRAs are tax-deferred accounts, meaning money invested within them can grow tax-free. Contributions on traditional IRAs are tax deductible and can help reduce your taxable income in whatever year they were contributed. When it comes time to withdraw money from your traditional IRA (age 59½ if you want to avoid penalties), you'll pay taxes at your marginal tax rate. For this reason, these accounts are great for high-income earners who expect to be in a lower tax bracket in retirement, as you can save on lifetime taxes by deferring your tax liability.

2. Roth IRA

Roth IRAs are funded with after-tax dollars, meaning money you've already paid taxes on. Like a traditional IRA, this money grows in your Roth IRA account tax-free, but because you paid taxes upfront, you won't have to pay taxes again when you withdraw it in retirement. Roth IRAs are generally best if you expect to be in a higher tax bracket in retirement.

3. SEP IRA/SIMPLE IRA

SEP IRAs and SIMPLE IRAs are for self-employed workers and small business owners. SEP and SIMPLE IRAs are treated like traditional IRAs for tax purposes, meaning that contributions are made with pre-tax dollars, and withdrawals are taxed as income in retirement. The primary advantage of SEP and SIMPLE IRAs is that they have substantially higher maximum annual contribution limits than a traditional or Roth IRA, and they can be top IRAs for individuals that qualify.

Why use an IRA?

When it comes to retirement planning, an IRA trumps a traditional brokerage account in one major way: taxes.

In a traditional brokerage account, you pay taxes on dividends, interest, and realized capital gains, whether you withdraw the earnings from your account, leave it, or reinvest in other securities. For instance, if you sell a stock for $5,000 more than what you paid, you would owe taxes on that $5,000 gain. If you pay, say, 20% taxes on that gain, you would have only $4,000 to reinvest after paying $1,000 in taxes.

With a traditional IRA, you pay taxes only when you withdraw from the account. So if you sell an investment that's appreciated by $5,000, you won't pay taxes on the gain unless you withdraw the money. That lets you lock in a gain and reinvest the money -- taking advantage of compound interest -- without losing some to taxes.

Likewise, Roth IRA gains aren't taxed at all, because the account is funded with post-tax dollars. So if you have a $5,000 gain on an investment, you can reinvest without losing money to taxes, and you can withdraw the increased amount in retirement without paying taxes.

An example of IRA tax benefits

Let's illustrate the benefits of using IRA accounts over a taxable account.Assume you start with a $5,000 balance and pay 20% tax on capital gains. For simplicity, also assume that every time your account balance doubles, you reinvest.

Realistically, most people don't employ such a strategy (selling everything each time their balance doubles), but many investors frequently sell stocks or funds to keep their accounts in line with their investment goals.

As you can see, the taxable account rapidly falls behind the IRA's growth because of the tax drag. When the IRA balance doubles, the taxable account balance increases by only 80%, due to the 20% tax applied to capital gains. This difference may seem small, but it really adds up as your investments appreciate and your account balance grows.

When should you open an IRA account?

There's not a "right age" for traditional IRAs, though the sooner you start investing for retirement, the more time you give your money to grow. In general, if your financial situation permits you to save, and you're not setting money aside for retirement in other accounts, now might be the right time to open an IRA.In regard to Roth IRAs, it's best to open these accounts when you're just starting your career, or when your income takes a temporary dip. Because you contribute after-tax dollars to Roth IRAs, these accounts are perfect when your tax rate is lower now than it will be in retirement.

Best IRA accounts for mutual fund investors

Most brokers will let you hold mutual funds in your IRA account. Where they may differ, however, is in the number of mutual funds they offer, as well as how much they charge for trading them. If mutual funds are important to you, here are some brokers you might want to consider.

Choosing a broker that offers a large assortment of no-transaction-fee mutual funds can help you avoid commission expenses. This is particularly advantageous if you're just starting out because this can save you a tremendous amount of money over time.

LEARN MORE: How to invest in mutual funds

Best IRA accounts for stock investors

If you plan to invest in individual stocks in your IRA, you can be less discerning when picking a brokerage. That's because virtually all brokers offer the same basic ability to buy or sell shares of companies listed on U.S. stock exchanges.

Investors who want to buy and sell individual stocks may find commissions, platform strength, and other features to be more important than fund investors do. With those features in mind, here's what major online brokerages offer for stock trading.

Given the virtually nonexistent difference in pricing among major online brokers, you might choose a broker based on more personalized features. For example, a Merrill Edge investment account can be linked to a Bank of America checking account, and a Charles Schwab account can link with a Schwab online bank account.

Need a checking account? See The Ascent's roundup of the best checking accounts.

What are the contribution limits for IRAs?

The amount you can contribute to an individual retirement account in a given tax year depends on the type of the account, your income, and your age.The maximum contribution amounts for 2023 are detailed in the table below. Keep in mind that these are the maximums -- you may be restricted based on your income and whether you have another retirement plan available through your employer.

When can you make IRA contributions?

IRA contribution limits follow a weird calendar. You can contribute for any given year up to the tax-filing date for that year. For example, if you want to make contributions for the 2023 tax year, you have until the tax deadline in 2024 to do so.

The timeline extends to the tax-filing day for tax-planning purposes. Some people wait until tax time to figure out whether it makes sense to contribute to a traditional IRA, Roth IRA, or both.

What is a rollover IRA?

One big perk of individual retirement accounts is that you can roll over balances from an employer-sponsored plan like a 401(k) into an IRA. Many people open a rollover IRA when they change jobs, thus moving their retirement investments from a 401(k) to a new IRA.

If you've never rolled a 401(k) into an IRA before -- or it's been a long time since you have -- here are two ways to do it:

1. Direct transfer: Any investments you hold in a 401(k) or other retirement account are simply moved to an IRA. You don't have to sell your investments to move cash over. For example, if you own shares of several mutual funds, those shares are just moved from your existing accounts to your rollover IRA.
2. Indirect transfer: An indirect transfer can be messy. In an indirect transfer, your investments are sold, and your 401(k) plan sponsor will send you a check for the balance. You then have 60 days to deposit the check into a rollover IRA to avoid paying taxes and penalties on the amount as a withdrawal.

We recommend doing a direct transfer whenever possible because it will minimize the effort required and can potentially save you a fortune in transaction costs.

LEARN MORE: How to Rollover a 401(k)

The discount broker advantage

We think discount brokers (the brokers you see on our list) are the smartest place for individual investors to open an IRA. That's because discount brokers have substantially reduced the cost of investing, which helps you save more for retirement.Most online brokers offer free trading, so you won't lose a chunk of your investments to fees. And they tend to offer low cost services, such as mutual fund investing, robo-advisor services, and more.

Not all brokerage firms have reduced their trading prices, though.

Many full-service brokerage firms still charge $100 or more per trade, while others clip massive commissions on mutual funds, equal to a percentage of the amount you invest. Some also have high penalties for moving an account to another broker. In theory, these high fees and commissions help traditional brokerages offer more hands-on attention and advice. But in practice, high commissions also encourage brokers to make decisions with your money that put more money into their pockets.

Self-directed investors now have access to more affordable tools that can help them select the investments they think are in their best interest -- and save money on fees and commissions. To compare top brokerages, see our expert reviews of the best online stock brokers.

Jump back up to:

• Our List of the Best IRA Accounts
• Reviews of the Best IRA Accounts
• Best IRA Comparison
• What to Consider When Picking an IRA Account