There is no single "best" Roth IRA — the right choice depends on what you plan to do with the account
A Roth IRA is a container, and the bank or brokerage that holds it matters less than what you can put inside it and what you pay to hold it. If you want to buy individual stocks, you need a brokerage that offers stock trading. If you want low fees and simple index funds, you need a provider with cheap funds. If you want to talk to a person, you need a provider with phone support. The "best" provider is the one that matches how you actually invest.
The major providers fall into three categories: full-service brokerages (Fidelity, Schwab, Vanguard), online-only brokerages (E*TRADE, TD Ameritrade, Interactive Brokers), and banks (most local and regional banks). Each has different costs, investment options, and customer service models. Your choice should rest on three concrete questions: What do you want to invest in? How much will it cost you? How do you prefer to get help?
Key Takeaways
- Fidelity, Schwab, and Vanguard offer low or zero account fees, a wide range of investments, and phone support; they work well for most people starting a Roth IRA.
- Online-only brokerages like E*TRADE and TD Ameritrade charge no account fees but may have higher per-trade costs or fund expense ratios if you pick the wrong investments.
- Banks often charge annual account fees ($50 to $150) and limit you to their own funds, making them more expensive than brokerages for long-term retirement saving.
- The real cost is the expense ratio of the funds inside the account, not the account fee itself — a 0.5% annual fee on a $10,000 account costs $50 per year, every year.
- You can move your Roth IRA from one provider to another without tax penalty, so starting with a major brokerage and switching later costs nothing but time.
What each type of provider charges and what you get
Full-service brokerages (Fidelity, Schwab, Vanguard) charge no account fees and no per-trade fees for stocks or most mutual funds. They offer thousands of mutual funds and ETFs, including their own low-cost index funds. All three have phone support during business hours. Fidelity and Schwab also have local branches in many cities. These are the most common choice for people opening a first Roth IRA because the entry cost is zero and the investment options are broad.
Online-only brokerages (E*TRADE, TD Ameritrade, Interactive Brokers) charge no account fees and no per-trade fees for stocks and ETFs. However, they may charge per-trade fees for mutual funds or have higher expense ratios on their own funds. They offer phone support but no physical locations. These work well if you plan to buy individual stocks or ETFs and rarely buy mutual funds. If you plan to buy mutual funds regularly, check their fee structure first — some charge $50 per transaction.
Banks typically charge $50 to $150 per year to hold a Roth IRA and limit you to their own mutual funds or CDs. The funds themselves often have higher expense ratios (0.75% to 1.5% annually) than you would pay at a brokerage. Banks are rarely the cheapest option for a Roth IRA, even if you already bank there. The annual fee alone makes them more expensive than a brokerage over 30 years of saving.
How to compare the actual cost of investing at each provider
The account fee is only part of the cost. The real cost is the expense ratio of the funds you buy. An expense ratio is an annual percentage that the fund company charges to manage the fund. On a $10,000 investment in a fund with a 0.10% expense ratio, you pay $10 per year. On the same $10,000 in a fund with a 1.0% expense ratio, you pay $100 per year. Over 30 years, that difference compounds.
Before you open an account, decide what you want to invest in. If you want a simple portfolio of index funds, look up the expense ratios of those funds at each provider. Vanguard's total stock market index fund (VTSAX) has a 0.04% expense ratio. Fidelity's equivalent (FSKAX) has a 0.045% expense ratio. Schwab's (SWTSX) has a 0.03% expense ratio. The difference between 0.03% and 0.04% is tiny, but the difference between 0.04% and 0.75% is not.
If you plan to buy individual stocks, the account fee and per-trade fees matter more than fund expense ratios. All major brokerages charge zero per-trade fees for stocks now, so the account fee (zero at Fidelity, Schwab, Vanguard, E*TRADE, and TD Ameritrade) is what you pay. A bank charging $100 per year to hold the account is expensive if you are buying stocks.
Fidelity, Schwab, and Vanguard compared
These three dominate the Roth IRA market because they charge no account fees, offer thousands of investments, and have low-cost index funds. The differences are small but real.
| Provider | Account Fee | Phone Support | Physical Locations | Lowest Index Fund Expense Ratio |
|---|---|---|---|---|
| Fidelity | $0 | Yes, 24/5 | Yes, nationwide | 0.045% (FSKAX) |
| Schwab | $0 | Yes, 24/5 | Yes, nationwide | 0.03% (SWTSX) |
| Vanguard | $0 | Yes, business hours | Yes, limited locations | 0.04% (VTSAX) |
Fidelity is the largest by assets and has the most local branches. Schwab has the lowest expense ratios on its index funds and owns TD Ameritrade, so it is growing. Vanguard is owned by its investors (the people who hold accounts there), which some people prefer philosophically, but this does not change what you pay. For a beginner buying index funds, the difference in cost between these three is less than $10 per year on a $10,000 account. Pick the one with the best phone support experience or the nearest branch.
When to use an online-only brokerage instead
E*TRADE, TD Ameritrade, and Interactive Brokers make sense if you plan to trade individual stocks frequently or want advanced trading tools. They charge no account fees and no per-trade fees for stocks and ETFs. However, they may charge per-trade fees for mutual funds (E*TRADE charges $49.95 per mutual fund transaction), so if you plan to buy mutual funds regularly, check their fee schedule first.
Interactive Brokers is the cheapest option if you plan to trade frequently, but it has a steep learning curve and minimal phone support. It is built for active traders, not beginners. E*TRADE and TD Ameritrade are middle ground — more tools than Fidelity or Schwab, but still accessible to someone learning to invest.
If you are unsure whether you want to trade stocks or just buy index funds, start with Fidelity, Schwab, or Vanguard. You can move the account later without penalty.
Why you should avoid banks for a Roth IRA
Banks charge annual fees ($50 to $150) and restrict you to their own mutual funds, which often have high expense ratios. A bank charging $100 per year plus 0.75% on a $10,000 account costs you $175 in year one. Fidelity charging $0 plus 0.045% costs you $4.50. Over 30 years, that difference grows to tens of thousands of dollars.
Banks market Roth IRAs to customers who already have checking accounts there, but the cost is not worth the convenience. If your bank offers a Roth IRA, open it at Fidelity, Schwab, or Vanguard instead. You can keep your checking account at the bank.
How to move your Roth IRA if you change your mind
You can move a Roth IRA from one provider to another without tax penalty or contribution limits. The process is called a trustee-to-trustee transfer. You contact the new provider, tell them you want to transfer your Roth IRA, and they handle the paperwork with your old provider. The transfer takes one to two weeks. You do not touch the money, so there is no tax consequence.
This means you can start at one provider and move later if you find a better fit. If you open a Roth IRA at your bank and later decide you want lower fees, you can move it to Fidelity for free. The only cost is time.
Frequently Asked Questions
Does it matter which provider I choose if I am just buying index funds?
No. If you are buying a simple portfolio of index funds and holding them for 30 years, the difference in cost between Fidelity, Schwab, and Vanguard is less than $10 per year. Pick whichever has the best customer service experience for you or the nearest branch. The difference in expense ratios (0.03% to 0.045%) is negligible compared to the difference between index funds (0.04%) and actively managed funds (0.75%).
Can I open a Roth IRA at my bank?
Yes, but it will cost you more. Banks charge annual account fees and restrict you to their own funds, which usually have higher expense ratios than index funds at a brokerage. Over 30 years, you will pay thousands of dollars more. If your bank offers a Roth IRA, open it at Fidelity, Schwab, or Vanguard instead.
What if I want to trade individual stocks?
Fidelity, Schwab, Vanguard, E*TRADE, and TD Ameritrade all allow stock trading with no per-trade fees. Pick based on which has the best trading tools and customer support for your needs. Fidelity and Schwab are good for beginners. E*TRADE and TD Ameritrade have more advanced tools. Interactive Brokers is cheapest but hardest to use.
Can I move my Roth IRA to a different provider later?
Yes, and it is free. Contact the new provider and request a trustee-to-trustee transfer. They handle the paperwork with your old provider, and the money moves in one to two weeks with no tax consequence. You can change providers as many times as you want.
What if I already opened a Roth IRA at a bank?
You can move it to Fidelity, Schwab, or Vanguard for free using a trustee-to-trustee transfer. Contact the new provider, tell them you want to transfer your Roth IRA, and they will handle it. The transfer takes one to two weeks. After that, you will pay lower fees and have more investment options.