Best Banks to Open a Roth IRA

by Junior Boomer on January 5, 2011

The Roth IRA has become one of the most talked about financial products on the market. So much so, that the word “Roth” has come to be synonymous with retirement funds, even though there are other types of IRA’s out there, including things like the traditional IRA, the SIMPLE IRA, and the education IRA.

All of these have their benefits and drawbacks. Some of them are relatively new to the IRA market. The SIMPLE IRA for instance allows an employer to fund an IRA for himself or herself and his or her employees, but also allows employees to contribute up to $11,500 each year into an IRA – even more if you’re over the age of 50.

But with all this talk of different kinds of IRAs, the Roth still enjoys the greatest reputation as a worthwhile retirement investment. And for good reason. The down side is that contributions are not tax deductible when they are put into the Roth, but the upsides are many. Roth IRA earnings accumulate tax free, and are tax free even upon distribution. The waiting period for withdrawing funds is also relatively short. To withdraw from a Roth IRA without penalty, the waiting period is only 5 years. Of course, it’s advised to wait as long as possible before withdrawing funds, but should an emergency occur it’s good to know that the money is available.

So What’s the Best Bank to Invest In?

It’s important to realize that there’s no one right answer for everyone. Additionally, it’s a good idea not to spend too much time hemming and hawing about the right bank to invest with. What’s more important is to start your IRA soon, to maximize the amount of time your money will have to build interest and value.

The highest rate that I’ve been able to find is through Everbank.  You can read more about Everbank here.

Considerations for Your Bank Roth IRA

That said, there are a few things you’ll want to consider. First, consider the level of customer service you’re going to need. If you’re new to investing, you’ll need a little more hand holding along the way. Investing with a bank that offers some help for young investors is probably a sound idea for the person in this situation. Call a few banks and have quick conversations about their offerings. See who you like the most, and who has the best customer service claim.

Also look for a bank that has a lot of free advice out there for managing your money. Check for banks that have active blogs or customer communities. Talk to these people and check on money management conversations. You want a partner that will help you leave your IRA in place for as long as possible so it can gain interest and help fund a comfortable retirement.

Look at factors like Minimum Deposit, Stock Trades Commission, Options Trades Commission, Margin Rates and inactivity Fees. Some banks may seem good on the surface, but then hit you with fee after fee for things that seem pretty silly. Customer service is important, but if you get nickel and dimed into paying for it, the cost versus the benefit may begin to shift.

Best High Interest Savings Account Online For Your Roth IRA

Everbank

  • Low $1,500 initial-deposit requirement
  • No-fee Online and Mobile Banking
  • Up to six withdrawals per month
  • 3 month bonus rate for new signees
  • FDIC Insured
  • Read here for EverBank Review

Sign up Here for EverBank Yield Pledge Money Market Account.

Ally Bank

  • FDIC Insured
  • Very competitive rates on savings and CD’s
  • Open account with 0$
  • No Minimum Balance

Sign up here for Ally Bank savings account or CD’s

WT Direct

Competitive interest rate for higher balances

  • No minimum balance or maintenance
  • Friendly customer service
  • FDIC insured

Sign up here for WT Direct savings account.

Discover Bank

  • Fast & free online transfers
  • No minimum balance
  • $500 to get started
  • Pays 5 times the national average

Sign up here for Discover Bank online savings and CD’s

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{ 2 comments… read them below or add one }

Mr. GoTo January 5, 2011 at 11:14 pm

Are you really suggesting that folks open a Roth IRA using a bank savings or money market account? That doesn’t make sense to me. They would be much better off using Vanguard or similar provider of low-cost mutual funds and ETFs. Second, not all of the banks you listed even offer IRA products.

Richard Stooker January 11, 2011 at 4:08 pm

I must agree with Mr. Go To that banks are not optimal institutions to place a retirement account.

I use an online discount broker, so I pay a minimal commission every time I pay ETF or individual stock shares.

If someone needs some “hand holding,” a bank employee is the wrong person to look for investment advise. Park your cash in a money market account and then pay a fee-only financial advisor to you a straight scoop.

Don’t listen to advise from brokers, commissioned financial advisors or bank customer service representatives. Or from investing gurus on TV or in magazines or newsletters either.

You neglected to mention that Everbank is the most convenient way for Americans to diversify their savings into foreign currencies. This is NOT foreign exchange trading. They offer certificates of deposits denominated in euros, yen, British pounds and other major currencies. With the decline in purchasing power of the US dollar, this could be a way to protect yourself from inflation in the US.

Still, my vote for the bulk of your funds must go for investing in businesses that meet basic human needs and who pay their investors dividends. Even if the economy falls apart, people spend money on food, electricity, shelter and water. So I favor utilities, consumer brand names, REITs and Master Limited Partnerships.

And to diversify currencies and geographically, I suggest people buy both American and foreign stocks.

Starhill Global REIT

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