Who are the top IRA accounts providers if you want to open your account or move it from an existing provider? IRA is a top choice for people who are looking to rollover their 401K from their previous employers. There are many similarities between a 401K and a Traditional IRA and many IRA providers have simple rollover options for you to convert from a 401K to Traditional IRA.
What is an IRA?
IRA stands for Individual Retirement Account. There are some varieties of IRAs available like Traditional IRA, Roth IRA, however in this article we are going to talk mainly in context of a Traditional IRA program.
Traditional IRA is a tax-deferred retirement planning program where you can make a contribution if you have taxable income in that year. You can start taking withdrawal from the age of 59 ½ and are required to take minimum distributions from the year you will turn 70 ½. All qualified contribution are tax free and withdrawal count towards your income on the year of withdrawal. See our complete guide on ROTH IRA here.
Important things to consider when selecting an IRA provider
Investment options: An IRA should have a wide range of investment options available to you if you. The range of options is important even if you are not looking to use all the options currently as with time your risk taking ability changes and so does your investment needs. Selecting a provider with wide range of investment options will ensure you will not have to move your IRA account at a later date (which can be hassle). If you are a passive investor, look for providers who offer a target retirement date fund. The main feature of a target retirement date fund is that it changes the portfolio mix based on how close the target retirement date is to adjust for the inherent risk in the portfolio.
Watch the fees: Some IRA administrators may charge you a fee for opening the account, setup fees, and monthly management fees, trade fees, etc. On top of it, the investment options available to you may have fees within them (such as mutual funds, ETF, etc.). Fees can eat a lot of your investment returns so selecting a provider with overall low fees is critical.
Investment research and tools: Access to good investment research and tools will help you make your investment decisions simpler. Make a list of tools
Our pick for the best IRA providers:
Fidelity: Fidelity offers a low trade fee and no maintenance fee. It however requires a minimum of $2,500 to open an IRA account.
Vanguard: Vanguard has a tried structure for pricing of trades and encourages fewer trades. A minimum of $1000 is required to open an IRA account at Vanguard. Vanguard offers many ETFs you can trade without any commissions.
Scottrade: Scottrade offer online trades as low as $7 per trade and requires only $500 to open an IRA account. Broke assisted trades are available at a higher pricing.
There are other providers like Charles Schwab, eTrade, ShareBuilder, TD Ameritrade and many more who also have comparable offering. If you already have a trading account at one of these companies, do inquire about the IRA account offered. Take some time to look at the hidden fees and investment options available to you.