Retirement accounts are an important piece of your long-term financial plan and a core vehicle that allows you to eventually leave your job and settle into your golden years. These tax-advantaged financial accounts are available at banks, investment brokerage firms and other licensed financial institutions. Most places that offer retirement accounts offer more than one option. Popular retirement accounts you can open for free at any major brokerage include Individual Retirement Accounts (IRA) and Roth IRA accounts.
Traditional IRA accounts work similar to an employer 401(k). They let you save and invest for retirement with “pre-tax” dollars. This means you don’t pay any taxes on the funds you invest today. Instead, you pay taxes on withdrawals in retirement, presumably at a lower tax rate than you pay during your working years.
Roth IRA accounts use “after-tax” dollars. This means you pay regular income taxes on the contributions this year, but your withdrawals and capital gains are tax-free in the future. Roth IRAs tend to be better for younger investors, while traditional IRAs are best for those nearing retirement.
Self-employed workers have some additional options, such as a Simplified Employee Pension (SEP) IRA. But as traditional and Roth IRAs are most popular, that’s the focus here.
When signing up for a retirement account, you will want to consider several important factors. That said, fees are the first place you should look in a retirement account. If your account provider takes a large percentage of your assets each year, your account may be working against you. Some account providers that charge fees are worthwhile, but this review focuses solely on accounts with no monthly or annual recurring fees built in.
While some accounts don’t charge any recurring fees, the providers have to make money somehow. In many cases, that comes through trading fees or commissions when you buy and sell stocks, mutual funds, ETFs, bonds, and other investments. Look out for those fees before signing up.
Next, look at the investments the account gives you access to. Some providers, like Vanguard, only give you access to Vanguard funds. Others, like Fidelity and Charles Schwab, give you access to a large range of investments from many fund families. Depending on your needs and goals, take this into account.
Last, but not least, look at your overall relationship and convenience. If you can put all of your investment and bank accounts under one login, you can save a lot of time, and sometimes money, managing your finances.
With so much to take into consideration and so much information to digest, we put together a handy round-up of the best free retirement accounts to open this year, so you can avoid being nickeled and dimed.
Best Free Retirement Accounts
Best Overall: Fidelity
Fidelity is consistently a top-rated brokerage and takes the top spot on our list of the best retirement accounts. Fidelity offers no-fee accounts, a large list of high-quality mutual funds at no cost, access to virtually every stock and bond out there, and industry-leading access to research so you know you are making the best investments.
Fidelity offers $4.95 stock and option trades, putting them in-line with the lowest cost tier of large investment companies. Fidelity also offers useful tools and resources, such as its retirement score tool that shows how you are doing compared to your retirement goals in about one minute.
In addition to online and phone support, you can also visit Fidelity branches dotted around the country for additional help or customer service. Whether you are a digital native who wants things to be mobile first or prefer a traditional, in-person experience, Fidelity has you covered for your retirement account needs.
Lowest Fee: Vanguard
Vanguard’s retirement accounts are not the same as all traditional brokerages. Rather than giving you access to every stock and fund available, Vanguard focuses your investments in Vanguard funds. But that is in no way a bad thing.
Vanguard mutual funds and ETFs are among the lowest cost in the industry, and with a Vanguard account, you can invest in Vanguard funds with no trade fees. Vanguard holds more than $5 trillion in assets thanks to the popularity of its funds.
The average expense ratio, or how much you are charged annual by a mutual fund or ETF, is 0.11 percent, according to the Vanguard website. That is much, much lower than the industry average 0.62 percent. Over years of costs and compounding, those low fees can easily save you tens of thousands of dollars that you can keep for retirement.
Best Robo-Advisor: Charles Schwab
Robo-advisors have grown to hold billions of dollars in retirement accounts, but none is more attractive than Charles Schwab’s Schwab Intelligent Portfolios product, which is available for retirement accounts.
Schwab Intelligent Portfolios are a no-fee robo-advising product. That means you don’t pay Schwab a dime to choose the best mix of investments for your needs. You will pay fund fees, as you would anywhere else, but there is no management fee for picking your investments, that’s a big benefit.
If you are worried about a computer picking your portfolio, it is important to understand how they work behind the scenes. You fill out a risk and goal assessment, and based on your answers, Schwab picks one of about a dozen portfolio combinations. It then invests your money into funds for you, and even helps lower your taxes in non-retirement accounts.
Want to learn more? Check out our full review of Charles Schwab.
Best for Beginners: Ally Invest
Ally Invest is a discount brokerage perfect for beginners. Trades cost $4.95 with discounts available for high volume accounts, though you probably won’t hit that discount ($3.95 trades over 30 trades per quarter) in an investment account if you’re doing things right.
Like others in this list, there are no monthly or annual fees for an Ally Invest IRA. There are fees for closing or transferring out, so make sure it is really the place you want to be before opening a new account.
Ally Invest accounts give you access to stocks, ETFs, options, mutual funds and fixed income products. Ally supports the full range of IRA accounts including traditional, Roth, SEP, SIMPLE, Rollover and Coverdell Education Savings Accounts.
Best From a Major Bank: Merrill Edge
Merrill Edge is a division of Bank of America, and existing Bank of America account holders may get some valuable perks by bringing their retirement and other investment assets under the same umbrella. While trades are a bit more than some competitors at $6.95, with a high balance you get free trades, among other perks.
With a combined balance of $50,000 or more across Bank of America accounts, you qualify for 30 free trades per month but must also hold an active Bank of America checking account to qualify. With a $100,000 combined balance, you get 100 free trades per month.
One benefit of Merrill Edge over the others, thanks to its relationship with Bank of America, is access to over 2,100 branch locations where you can get help with your accounts. If you want lots of hands-on customer service in person, Merrill Edge may be your best choice.
Best for Trading Platform: TD Ameritrade
Trades at TD Ameritrade cost $6.95, so they are not the cheapest out there. But TD Ameritrade does bring investors arguably the best trading platform out there: thinkorswim. This desktop-based trading app will have active traders salivating at its extensive charts, market data, and quick trade tools.
TD Ameritrade is another top brokerage for beginners, as it offers deep education assets sorted by your investing experience. That includes videos, quizzes, articles and live seminars. There is a ton of value tucked away in the education section.
Once you know what you are looking at, get access to data from Zacks, Dow Jones, Market Edge, Credit Suisse and others. While keeping your retirement portfolio simple is a smart strategy, you can use the education and research tools at TD Ameritrade to help up your investing IQ for any type of investment account.
You can also read through our full review of TD Ameritrade.
Best for Mobile Investing: Etrade
Etrade is one of the oldest online brokerage firms in the world, so it is no surprise that it brings one of the best mobile experiences among all retirement accounts. Trades are $6.95 (volume discounts available).
If you hold at least $250,000 in your accounts, you will get access to the premium E-Trade Pro desktop client and 30 trades per month, but even with a lower balance, you get access to the mobile app, which contains many features from top-of-the-line desktop trading platforms.
Research is freely available to account holders and includes an extensive library. Also keep in mind that you can access 4,400+ mutual funds with no transaction fees, which puts it ahead of even Fidelity and Schwab for free funds. This is particularly valuable for retirement accounts.
Best for Active Traders: Interactive Brokers
Interactive Brokers does pricing a little differently, and the pricing model is particularly valuable for active traders. Instead of a flat fee per trade, customers get access to either “Fixed Rate Plans” or “Tiered Plans” for trade fees.
For most stocks, you will pay $0.005 cents per share with a $1 minimum and 0.5 percent maximum fee per trade. But with access to over 4,300 no-fee mutual funds, you may not buy many stocks in this account.
Interactive Brokers offers competitive online, web and mobile trading platforms. Some research is available, but you’ll have to pay extra to get the full library. Interactive Brokers is best for the most experienced traders.