You can open a Roth IRA at a bank, brokerage firm, or robo-advisor, and the choice depends on how much you want to manage yourself and what fees you can accept
A Roth IRA is a retirement account, not a specific investment. You need to open it somewhere — at an institution that holds the account and lets you put money in. The main options are traditional brokerages (Fidelity, Charles Schwab, E*TRADE), online brokerages (Robinhood, Webull), robo-advisors (Betterment, Wealthfront), and banks. Each charges different fees, offers different investment choices, and requires different amounts of hands-on work from you. There is no single "best" place; it depends on whether you want to pick individual stocks, prefer a managed portfolio, or just want simplicity.
Key Takeaways
- Brokerages like Fidelity and Schwab let you buy individual stocks, funds, and bonds with no account fees, but you decide what to buy.
- Robo-advisors automatically build and rebalance a portfolio for you, charge 0.25% to 0.50% per year, and work best if you do not want to make investment decisions.
- Banks offer Roth IRAs but usually limit you to savings accounts and CDs, which earn very little interest and lose money to inflation over decades.
- Opening an account takes 10 to 20 minutes online; you will need your Social Security number, income information, and a funding method.
- You can move money between institutions later without penalty, so choosing wrong is not permanent.
Traditional Brokerages: No Fees, Full Control
The largest and most established option is a traditional brokerage — Fidelity, Charles Schwab, E*TRADE, or TD Ameritrade. These firms charge no account fees to hold a Roth IRA. You can buy stocks, mutual funds, exchange-traded funds (ETFs), and bonds. You control every decision: what to buy, when to sell, how much to hold in each investment. This is the right choice if you already know what you want to own or are willing to learn.
The tradeoff is that you do the work. You research investments, make buy-and-sell decisions, and rebalance your portfolio yourself. If you have never invested before, this can feel overwhelming. Most brokerages offer educational resources and customer service, but they will not tell you what to buy — that would be investment advice, which they cannot give without a license.
Opening an account at a brokerage usually takes 10 to 15 minutes online. You will need your Social Security number, date of birth, address, employment status, and annual income. You can fund the account by linking a bank account or mailing a check. The minimum to open is often zero dollars; you can open the account and fund it later.
Robo-Advisors: Automatic Portfolio Management
A robo-advisor is a service that builds and manages a portfolio for you based on your age, risk tolerance, and goals. You answer a questionnaire, the robo-advisor creates a mix of low-cost index funds, and it automatically rebalances the portfolio as markets move. Common robo-advisors are Betterment, Wealthfront, Vanguard Personal Advisor Services, and Schwab Intelligent Portfolios.
Robo-advisors charge between 0.25% and 0.50% per year of your account balance. Some charge nothing if your balance is below a certain threshold (often $500 or $1,000). For a $10,000 account, that is $25 to $50 per year. The fee comes out automatically. In exchange, you do not have to pick investments or rebalance; the robo-advisor does it for you. This is the right choice if you want professional-grade management but do not want to learn how to invest.
Opening a robo-advisor account takes 15 to 20 minutes. You answer questions about your age, income, risk tolerance, and time horizon. The robo-advisor then shows you a proposed portfolio and asks you to confirm. You will need the same documents as a brokerage: Social Security number, address, income, and a way to fund the account.
Banks: Limited Options, Low Returns
You can open a Roth IRA at a bank — Bank of America, Wells Fargo, Chase, or your local credit union. A bank Roth IRA holds money in a savings account or certificate of deposit (CD), not stocks or funds. The account is insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000, so your money is safe from bank failure.
The problem is returns. A high-yield savings account at a bank currently earns 4% to 5% per year, while the stock market has historically returned about 10% per year over long periods. Over 30 years, that difference compounds into a much smaller retirement account. Banks are appropriate only if you are very close to retirement, extremely risk-averse, or have already maxed out other retirement accounts and have extra money to save.
Opening a bank Roth IRA is simple: walk into a branch or go online, provide your Social Security number and address, and link a funding source. Many banks have no minimum balance requirement, though some require $100 or $500 to open.
Online Brokerages: Lower Minimums, Fewer Features
Online brokerages like Robinhood, Webull, and Public offer Roth IRAs with no account fees and no minimum balance. They are designed for people who want to trade frequently or own individual stocks. They typically have simpler interfaces than traditional brokerages and lower barriers to entry.
The tradeoff is that online brokerages often have fewer investment options, less educational content, and less robust customer service. Some do not offer mutual funds or have limited fund selections. If you plan to buy a few index funds and hold them for decades, this limitation does not matter. If you want flexibility, a traditional brokerage is safer.
What Happens After You Open the Account
Once your account is open, you can contribute up to $7,000 per year (as of 2024; this amount changes yearly). You can contribute all at once or in smaller amounts throughout the year. The money sits in the account until you invest it — at a brokerage or robo-advisor, you choose what to buy; at a bank, it earns interest automatically.
You can withdraw your contributions (the money you put in) at any time without penalty. You cannot withdraw earnings (the money your investments made) until you turn 59½ without paying taxes and a 10% penalty, with some exceptions. This is why a Roth IRA is a long-term account.
If you open an account at one institution and later want to move to another, you can do a direct transfer (the institutions move the money between themselves) or a rollover (you receive the money and deposit it elsewhere within 60 days). Neither triggers taxes or penalties if done correctly. This means you are not locked in; you can change your mind.
Comparing Costs Across Institutions
| Institution Type | Account Fee | Investment Options | Best For |
|---|---|---|---|
| Traditional Brokerage (Fidelity, Schwab) | None | Stocks, funds, bonds, ETFs | People who want full control and low costs |
| Robo-Advisor (Betterment, Wealthfront) | 0.25%–0.50% per year | Index funds only | People who want hands-off management |
| Online Brokerage (Robinhood, Webull) | None | Stocks, some funds | People who want to trade frequently |
| Bank (Chase, Wells Fargo) | None | Savings account, CDs only | People very close to retirement or extremely risk-averse |
Frequently Asked Questions
Can I open a Roth IRA at multiple places?
Yes. You can have Roth IRAs at several institutions. However, your total contributions across all accounts cannot exceed $7,000 per year (as of 2024). If you contribute $4,000 at one brokerage and $3,000 at another, you have hit your limit. Track your total contributions across all accounts to avoid penalties.
Do I have to pick investments right away?
No. At a brokerage or robo-advisor, you can open the account, fund it, and leave the money in a money market fund or cash sweep account while you decide. At a bank, the money earns interest automatically. You have time to think, but the longer money sits uninvested at a brokerage, the more you miss out on potential growth.
What if I want to move my money to a different institution later?
You can transfer your entire Roth IRA to another institution without taxes or penalties. Contact the new institution and ask for a direct transfer form. The old institution sends the money directly to the new one. This takes one to two weeks. You can do this as many times as you want.
Which brokerage is cheapest?
Traditional brokerages (Fidelity, Schwab, E*TRADE) charge no account fees, so they are all equally cheap at zero dollars per year. The difference is in features, investment options, and customer service. Compare based on what you want to own and how much help you need, not price.
Can I open a Roth IRA if I do not have much money to start?
Yes. Most brokerages and robo-advisors have no minimum balance to open an account. You can open with zero dollars and fund it later, or start with $50 or $100. The only limit is your annual contribution cap of $7,000.