Comparing Roth IRA Providers
If you've decided that a Roth individual retirement account (IRA) has tax benefits that make the most sense for your retirement planning needs, congratulations! Now you must figure out which IRA custodian to entrust with your savings.
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IRA Custodian Types
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An IRA is a type of tax-preferred account--you can place just about any type of investment inside it. If you have a low tolerance for risk, open a Roth IRA with a bank or credit union. Banks and credit unions usually have CDs and money market deposits, and are insured by the Federal Deposit Insurance Corporation (FDIC). You could also invest with a mutual fund company, discount broker, or full-service broker if you want a greater variety of options.
Considerations
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When comparing between two types of Roth IRA custodians, investigate how their fee structures will jive with your investment strategy. For instance, some brokerage houses don't charge commissions if you invest in their mutual funds, but do charge relatively heavy fees for trades. If you planned to trade often, a discount broker with cheaper trade fees might be the way to go.
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Features
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Once you've figured out which type of custodian you want, find out which features individual institutions offer for your convenience. For instance, some custodians allows you to set up automatic withdrawals to fund your Roth IRA. Some Roth IRA custodians allow you to log in remotely to manage your account. If you plan to start with a small investment, find out what, if any, account minimums a Roth IRA custodian requires.
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References
- CashMoneyLife: How to Open a Roth IRA and What to Look for in a Custodian
- MoneyGirl: How to Choose an IRA Custodian
- FDIC Consumer News: Deposit Insurance for Retirement Savings
- CareOne: Certificates of Deposit -- A Low Risk and Safe Investment
- FinWeb: Need a Safe Investment? Money Market Account Advantages
- Photo Credit show me the money image by Perrush from Fotolia.com
