You can open a Roth IRA at a bank, brokerage, credit union, or robo-advisor—each charges different fees and offers different investment choices

A Roth IRA is a retirement account you can open at almost any financial institution that handles investments. The main difference between providers is what you pay in fees, what investments they offer, and how much help you get choosing them. You do not need to open your account at the same place where you have a checking account, and you can move money between providers later if you want to.

The account itself is free to open. What costs money is trading stocks or funds inside the account, paying annual maintenance fees, or paying an advisor to manage it for you. Before you pick a provider, decide whether you want to pick individual stocks and funds yourself, or whether you want someone else to manage the money for you.

Key Takeaways

  • Brokerages like Fidelity, Charles Schwab, and Vanguard let you pick individual stocks and funds with little or no trading cost, and charge no annual account fee.
  • Robo-advisors like Betterment and Wealthfront automatically build and rebalance a portfolio for you, charging 0.25% to 0.50% per year of the money you have in the account.
  • Banks and credit unions offer Roth IRAs but usually limit you to savings accounts and CDs, which earn very little interest compared to stock market investments.
  • You can open an account online in 15 to 30 minutes and start funding it right away, though the money may take a few business days to arrive.
  • You can move your Roth IRA to a different provider later without tax penalties, though the process takes one to two weeks.

Brokerages: the most common choice for self-directed investors

A brokerage is a company that lets you buy and sell stocks, bonds, mutual funds, and exchange-traded funds (ETFs). The three largest brokerages used for Roth IRAs are Fidelity, Charles Schwab, and Vanguard. All three charge no annual account fee and no trading commissions on stocks and most funds. You pick what to invest in, and the brokerage executes the trade.

Opening an account takes about 15 minutes online. You will need your Social Security number, a government ID, your address, and a bank account to transfer money from. The brokerage will ask you basic questions about your age, income, and investment experience—these are required by law but do not determine whether you can open the account. Once approved, you can fund the account by linking a bank account and transferring money electronically, or by mailing a check.

The trade-off is that you are responsible for deciding what to buy. If you do not know the difference between a stock and a bond, or you do not want to spend time researching funds, a brokerage may feel overwhelming. Many brokerages offer educational resources and target-date funds (funds that automatically shift from stocks to bonds as you get closer to retirement), which can help.

Robo-advisors: automatic portfolio management for a small fee

A robo-advisor is a service that builds and manages an investment portfolio for you based on your age and risk tolerance. You answer a questionnaire about when you plan to retire and how comfortable you are with market swings, and the service invests your money in a mix of stocks and bonds. It automatically rebalances the portfolio (sells winners, buys losers) to keep it aligned with your goals.

The largest robo-advisors are Betterment, Wealthfront, and Schwab Intelligent Portfolios. Betterment and Wealthfront charge 0.25% per year on accounts under $100,000 and 0.15% per year on larger accounts. Schwab Intelligent Portfolios charges nothing if you keep at least $500 in the account. Opening an account works the same way as a brokerage: 15 minutes online, your Social Security number and a bank account to fund from.

The advantage is that you do not have to think about what to buy or when to rebalance. The disadvantage is the annual fee—on a $10,000 account, Betterment charges $25 per year, which is small but not zero. If you plan to invest a large amount and leave it alone, a brokerage with no fees will cost you less over time. If you have a small amount and want hands-off management, a robo-advisor is worth the fee.

Banks and credit unions: limited options, not recommended for most

You can open a Roth IRA at your bank or credit union, but most offer only savings accounts and certificates of deposit (CDs) as investment options. A savings account at a bank currently earns 4% to 5% per year, and a CD might earn 4.5% to 5.5%. These are safe but grow slowly compared to stock market investments, which have historically returned about 10% per year over long periods.

A bank Roth IRA makes sense only if you are very close to retirement and want to avoid stock market risk, or if you are saving small amounts and your bank waives fees. For most people saving for retirement decades away, a brokerage or robo-advisor will build wealth faster.

How to compare providers before you choose

Before opening an account, make a list of what matters to you: Do you want to pick investments yourself, or do you want automatic management? How much money do you plan to put in? Are you comfortable with stocks, or do you want something safer? Do you want to talk to a human, or are you fine with online-only support?

Then check the provider's website for account fees (most charge zero), trading commissions (most charge zero for stocks and ETFs), and what investments are available. If you plan to invest in specific funds or stocks, search the provider's site to make sure they offer them. Read the funding options—some let you transfer from another brokerage for free, while others charge a fee.

You do not need to choose perfectly. You can open an account at one provider, and if you change your mind later, move the money to another provider through a process called a direct transfer. This takes one to two weeks and does not trigger taxes or penalties.

The account opening process, step by step

Most brokerages and robo-advisors follow the same steps. Go to the provider's website and click "Open an Account" or "get your free guide." You will be asked for your name, address, date of birth, Social Security number, and employment information. Have a government ID handy to verify your identity.

Next, you will link a bank account to fund the Roth IRA. The provider will ask for your bank's routing number and your account number, or will let you log in to your bank to authorize the transfer. You can usually transfer money immediately, though it may take one to three business days to arrive in your Roth IRA.

Once the money is in your account, you can invest it. At a brokerage, you search for the stock or fund you want and place an order. At a robo-advisor, the service automatically invests the money according to your profile. You can make additional deposits anytime, up to the annual contribution limit set by the IRS.

Moving your Roth IRA to a different provider

If you open an account at one provider and later want to move it to another, you can do so without paying taxes or penalties. Contact the new provider and ask for a direct transfer form. Fill it out with information about your current account, and the new provider will contact your old provider and move the money electronically.

A direct transfer takes one to two weeks. Do not withdraw the money yourself and deposit it at the new provider—that counts as a distribution and can trigger taxes and penalties. Always use the direct transfer process.

You can also move money between your own accounts at different providers as often as you want. The IRS limits you to one rollover per 12-month period if you withdraw the money yourself, but direct transfers do not count against this limit.

Frequently Asked Questions

Do I have to open a Roth IRA at the same bank where I have a checking account?

No. Your Roth IRA can be at a completely different institution. Many people keep their checking account at a local bank and their Roth IRA at a large brokerage like Fidelity or Vanguard because brokerages offer better investment options and lower fees.

Can I open a Roth IRA if I do not have much money to start with?

Yes. Most brokerages and robo-advisors have no minimum opening balance. You can open an account with $1 and add more later. Some providers offer automatic monthly transfers, which can help you build the habit of saving.

What if I want to talk to a person instead of doing everything online?

Fidelity, Charles Schwab, and Vanguard all have phone support and local branches in many cities. Robo-advisors like Betterment offer email and chat support but not phone support. Banks and credit unions usually have in-person staff who can help you open an account.

Can I have more than one Roth IRA?

Yes, but your total contributions across all Roth IRAs in a single year cannot exceed the IRS limit (currently $7,000 for people under 50, $8,000 for people 50 and older). Having multiple accounts does not let you contribute more—it just spreads the same limit across different providers.

What happens if I open an account but do not fund it right away?

Nothing. The account will sit empty until you transfer money into it. There is no penalty for opening an account and waiting to fund it, and no annual fee charged on an empty account at most providers.