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What is the Best Roth IRA Broker?

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Every week I get at least one email from a reader asking me which broker is the “best” for their Roth IRA. The number of emails jumps exponentially after the new year and, fortunately, falls after April 15th! You have until April 15th, 2011 to decide if and how much you will contribute to your Roth IRA for 2010. If this is the first year you’re contributing to a Roth IRA, you’ll also have to pick who you want to watch over your money.

Before you decide where to put your money, you really need to decide what you want to invest in. If you want to invest it in mutual funds, you’ll be best served going with the company that runs the funds you like. The two big names in the mutual fund space are Fidelity and Vanguard. If you really like their funds, I recommend you open a mutual fund account directly with them because you will be able to buy and sell shares for free.

If individual stocks are more your thing, then you’ll want to pick a broker that offers services you like at a cost that’s affordable. Discount brokers are all the rage these days, with sub-$5 stock commissions and all the research you could ever want. My personal opinion is that as long as you can satisfy the minimum balance requirements and the fees aren’t expensive, the broker is less important. I personally like TradeKing because their customer service has been rated one of the best and I’ve never had issues with it myself (I use their online chat feature all the time). They aren’t necessarily the cheapest anymore, there are a few even cheaper, but there’s a bit of an inertia effect there (I have my stocks there and I don’t trade much, so I don’t want to go through the process of moving them).

I’m about to provide you with a bunch of information from a variety of brokers but I want you to know one thing – it doesn’t matter which broker you pick. It is more important that you start contributing towards your retirement as soon as possible because each year you wait is another year you lose out on gains. Some will charge you $15 a trade, some will charge you $5, but those all pale in comparison to how much you lose if you let that decision paralyze you.

Best Roth IRA Broker Fee Comparison

IRA Broker Stock Commission Mutual Fund Commission Account Fees Min. Balance
TradeMONSTER Roth IRA $7.50 $15 $0 $2000
TradeKing Roth IRA $4.95 $14.95 $0 $0
OptionsXpress Roth IRA $14.95 $14.95 $0 $0
E*Trade Roth IRA $12.99 Up to $19.99 $0 $0
Zecco Roth IRA $0/$4.50 * $10 $0 $0
Fidelity Roth IRA $19.95 $0 (their funds) $0 $2500
Vanguard Roth IRA $19.95 $0 (their funds) $20 $3000

* Zecco offers 10 free stock trades a month when you maintain a $25,000 balance or execute at least 25 trades a month, otherwise it’s $4.50 a trade.

Vanguard Brokerage Account

Vanguard is a special case because they have two types of accounts. They have a fund account where you can only buy and sell Vanguard funds, those fees are listed in the above table. They also have a brokerage account where you can buy stocks, bonds, ETFs, etc. The fees for both are different. Here is the full fee schedule for the brokerage account. I’m not really sure why they segregate it in this way, it’s annoying, but they like to keep the two worlds apart.

If you have a Roth IRA, where do you keep it and why?

{ 20 comments, please add your thoughts now! }

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20 Responses to “What is the Best Roth IRA Broker?”

  1. Jeremy says:

    Vanguard. No question.

    No fees for a Roth if you sign up for their web-based notifications instead of paper notifications (I just print them myself).

    Vanguards funds, in my mind, are better than fidelity.

  2. DJ Wetzel says:

    I just opened up a new ROTH IRA account with Fidelity. I decided to go with them b/c they will forgo the minimum balance if you opt to enroll in $200 or more automatic monthly deposits.

  3. NateUVM says:

    FINRA registered representatives need to disclose to their Broker Dealer any brokerage accounts that they have. The exception to this are accounts where registered reps can only buy Mutual Funds.

    Not sure if this is why Vanguard segregates the types of accounts, but this could be one possible explanation, as it would cut down on beaurocracy.

  4. cubiclegeoff says:

    I use T Rowe Price. The fees are pretty decent, generally better than Fidelity I’ve found, and the minimum automatic payment is lower, if you have a smaller account balance.

    • daenyll says:

      the minimum initial investment and automatic payments were the reason I went with TROWE rather than fidelity, it’s much less discouraging for someone just starting out or with small balances to have the lower startup requirements.

    • live green says:

      Yeah, there brokerage fees don’t look too good. I have my Roth with them, but I only have it their mutual funds, mostly index funds. The fees are pretty low and there are no annual fees.

  5. Mike says:

    Do you have info handy on which of these has an option to reinvest dividends on individual stocks?

  6. Norman says:

    My IRA and Roth IRA is in individual stocks at Schwab. Been with Schwab a very long time and have always been satisfied. They charge $8.95 to make a trade of individual stocks and I don’t trade very often.

  7. L says:

    Things to consider…
    ACAT transfer fee (very common) charged by delivery firm (range from $30 to $150)

    Annual maintenance fee

    minimum balance fee

    commission

    Customer..if you like to do things online (who cares about telephone customer service).

    If you want full service firm, avoid online company. Go for full service brokerage firm that is what they are for.

    As Jim says, broker is not important as long as you like the fee structure & can afford to pay.

    You SIMPLY cannot play STUPID and says nobody told me about the fees if you get charged.

    You are responsible for reading the small letter disclosure & aware of the fee structure.

    You get what you pay for.

  8. mannymacho says:

    I think your table may be a little outdated. Fidelity recently slashed their stock trade fees to $7.95 and have zero-fee ETFs too.

  9. yakov says:

    Last I Checked Zecco has a 30 dollar annual fee and a 30 dollar account closing fee.

  10. zapeta says:

    I have my Roth at Vanguard. Low fees and no fee to buy/sell.

  11. Ben says:

    Fidelity has lowered there stock trades. In addition they offer several no fee funds besides fidelity funds which have no costs to get into the. Also the minimum balance only refers to the minimum purchase amount of your initial investment into a particular mutual fund. After that you purchases can be $100 to buy more shares of that fund.

  12. Tom says:

    Optionshouse charges $2.95 per trade. They offer IRAs with no fees. I am always looking for the cheapest brokerage and they are the lowest per trade I could find. I think they are ignored because they have the term options in the name and it scares people off.

  13. Demi says:

    Jim….your full fee schedule link does not appear to work for Vanguard. Unless it is just me.

    I’ve been thinking of rolling my Roth from Wachovia to Vanguard (my parents have had Vanguard for years and it pays fairly well). I dumped my Roth into Wachovia rather quickly because I moved all my regular banking there after my ex and I divorced. Now its time to take a good hard look at it.

  14. javi says:

    I opened my Roth at Vanguard. Low fees and excellent funds made my choice easy.

  15. FlyFisher says:

    I use sharebuilder, it is great!!! No minimum fees $4 automatic investments and $9.99 real time trades. Simple and useful layout, linked easily to my ING account, and tons of promos constantly running. Currently I have 15 free automatic investments and 3 free real time trades sitting in my account from promo codes I found online, its great! Highly recommend them.

  16. jsbrendog says:

    vanguard for the win! 2 and a half yrs later and livin the dream

  17. liz says:

    whew! this is hard to comprehend especially if you are a novice in this field. But being that we do not have upfront minimum investment – I guess my husband and I will go for Fidelity instead.


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