You can open a Roth IRA at a bank, brokerage firm, or robo-advisor — each charges different fees and offers different investment choices
A Roth IRA is not a product you buy from one place. It is an account type that any financial institution can offer. You choose where to open one based on what you want to invest in, how much you want to pay in fees, and how much help you want making decisions. The institution holds the account and the money inside it; you decide what investments go in the account.
The three main categories are traditional brokerages (which let you pick individual stocks and funds), robo-advisors (which build a portfolio for you automatically), and banks (which offer limited investment options but are simple). Each has real tradeoffs in cost, control, and complexity.
Key Takeaways
- Brokerages like Fidelity, Schwab, and Vanguard let you choose from thousands of investments but require you to make those choices yourself.
- Robo-advisors like Betterment and Wealthfront build a diversified portfolio for you based on your age and risk tolerance, with lower fees than human advisors.
- Banks offer Roth IRAs but usually only in certificates of deposit or money market accounts, which earn less than stock market investments over time.
- Minimum deposits range from zero to several thousand dollars depending on the provider, and annual fees vary from zero to 1 percent of your balance.
- You can move your Roth IRA from one provider to another without tax penalty through a process called a rollover.
Brokerages: Full control, more decisions to make
A brokerage is a company that lets you buy and sell investments. The major ones — Fidelity, Charles Schwab, Vanguard, E-Trade, and TD Ameritrade — all offer Roth IRAs with no minimum deposit or very low ones ($0 to $500). They charge no annual account fee. You pay only when you trade (buy or sell), and most brokerages now charge zero commission on stock and fund trades.
The tradeoff is that you choose what to invest in. You can pick from thousands of mutual funds, exchange-traded funds (ETFs), individual stocks, and bonds. This freedom is powerful if you know what you want, but it means you have to research and decide. Many brokerages offer educational articles and tools to help, but they do not tell you what to buy.
Brokerages are best if you want low fees, plan to invest regularly, and are willing to learn about funds and diversification. They are also the right choice if you want to invest in specific companies or have strong views about how your money should be invested.
Robo-advisors: Automatic portfolio building with lower fees than human advisors
A robo-advisor is a service that builds and manages a portfolio for you based on a questionnaire about your age, income, and risk tolerance. Betterment, Wealthfront, and Vanguard Personal Advisor Services are the most common. You answer questions about when you plan to retire and how comfortable you are with market ups and downs. The robo-advisor then puts your money into a mix of low-cost index funds automatically.
Robo-advisors charge between 0.25 and 0.50 percent of your account balance per year. That means if you have $10,000, you pay $25 to $50 per year. Some have no minimum deposit; others require $500 or $1,000 to start. They rebalance your portfolio automatically — meaning they sell investments that have grown too large and buy ones that have shrunk, keeping your mix steady without you having to do anything.
Robo-advisors are best if you do not want to pick individual investments, prefer a hands-off approach, and are comfortable with a diversified portfolio of index funds. They cost more than a brokerage (which charges nothing if you do not trade) but far less than hiring a human financial advisor, who typically charges 1 percent or more.
Banks: Simple but limited investment options
Most banks offer Roth IRAs, but only in certificates of deposit (CDs) or money market accounts. A CD is a savings product where you lock up your money for a set time (three months to five years) in exchange for a fixed interest rate. A money market account is like a savings account with a slightly higher interest rate.
Bank Roth IRAs are straightforward — you deposit money, it earns interest, and you can see your balance grow predictably. There is no stock market risk. However, interest rates on CDs and money market accounts are typically 4 to 5 percent per year, while the stock market has historically returned around 10 percent per year over long periods. Over decades, that difference compounds significantly.
Bank Roth IRAs make sense only if you are very close to retirement, extremely risk-averse, or using the Roth IRA as a backup savings account rather than your main retirement investment. For most people saving for retirement decades away, a brokerage or robo-advisor offers better long-term growth.
Comparing fees, minimums, and investment choices
| Provider Type | Typical Minimum | Annual Fee | Investment Choices | Best For |
|---|---|---|---|---|
| Brokerage (Fidelity, Schwab, Vanguard) | $0–$500 | $0 | Thousands of funds, stocks, bonds | Control and low cost |
| Robo-advisor (Betterment, Wealthfront) | $0–$1,000 | 0.25–0.50% | Diversified index fund portfolios | Hands-off investing |
| Bank (Chase, Bank of America, Wells Fargo) | $0–$2,500 | $0–$25/year | CDs and money market accounts only | Safety and simplicity |
How to move your Roth IRA if you change your mind
You are not locked into your first choice. You can move your Roth IRA from one provider to another through a rollover. You contact your new provider and ask them to initiate the transfer. They handle the paperwork with your old provider, and your money moves without you touching it. This is called a direct rollover and has no tax consequences.
The process usually takes five to ten business days. During that time, your money is in transit and not invested, so you miss any market movement. You can do one rollover per Roth IRA per year, though this rule resets on a calendar year basis. If you move money multiple times in a year, the second move may be taxed, so plan ahead if you think you might switch providers.
Many people open a Roth IRA at a brokerage first because fees are low and options are broad. If you later decide you want a robo-advisor to manage it for you, or vice versa, you can move it without penalty. The only cost is the time the money sits uninvested during the transfer.
Frequently Asked Questions
Do I have to use the same bank where I have my checking account?
No. You can open a Roth IRA at any bank, brokerage, or robo-advisor, regardless of where you keep your everyday money. Many people use a brokerage or robo-advisor for their Roth IRA and a separate bank for checking and savings because brokerages offer better investment options for retirement money.
What if I want to invest in real estate or cryptocurrency in my Roth IRA?
Most brokerages and robo-advisors do not offer real estate or cryptocurrency directly. You would need a self-directed IRA provider, which is a specialized custodian that allows alternative investments. These are more complex and charge higher fees. For most people, a standard brokerage with index funds is the simpler path.
Can I open a Roth IRA with just $100?
Yes, if you choose a provider with no minimum deposit. Fidelity, Schwab, and many robo-advisors let you start with any amount. Some brokerages require $500 or $1,000 to open, but you can usually add money later in smaller amounts. Check the specific provider's website for their minimum.
What happens if I open a Roth IRA but never use it?
Nothing bad happens. Your account stays open and you pay no fees (at most brokerages). You can leave it dormant for years and add money whenever you want. The account does not expire or close because it is inactive. However, you miss out on years of potential investment growth, so starting early is better than waiting.
Should I open a Roth IRA at the same place as my 401(k)?
Not necessarily. Your employer's 401(k) is managed by a plan administrator your employer chose. Your Roth IRA is separate and you choose the provider. Many people keep them at different places because they serve different purposes and have different fee structures. You can open a Roth IRA anywhere, regardless of your 401(k) provider.