Discover the Magic of IRAs
Advantaged tax accounts are great for retirement, savings, and investments. However, if you want to exert greater control of your investments in your retirement account, the IndividuaL Retirement Account (IRA) is custom-made to serve you.
As a self-directed account, an IRA allows you to take full control of your investments and select the financial institution—a trustee—to handle them. Therefore, choosing the best IRA providers is critical in getting the most out of your retirement planning.
Some of the Best IRAs
As financial consolidation of services continues, you will find that best IRA investment companies will also hold online brokerage accounts with robo-advisors. That is not to say that you should use your IRA as an active trader, but long-view investment in the form of blue-chip stocks wouldn’t hurt either.
- Betterment — Speaking of long-term investments, Betterment will give you all the tools needed to form individual retirement plans. It has no account minimums, no withdrawals, and no deposits minimums. It allows you to employ its comprehensive online tools to set up your plan and leave everything to Betterment, so you can view it as a platform oriented towards more advanced investors, but once set, it’s on auto-pilot.
- Fidelity — On the other end of the risk-taking, Fidelity is great for active stock traders. Without minimum deposits or monthly fees, you will be able to invest in stocks, bonds, ETFs, and mutual funds. The latter requires passing a financial threshold to become available. It has a very user-friendly management system alongside valuable educational resources, allowing you to effortlessly transfer your IRA from other financial institutions.
- E*TRADE — Daily traders don’t appreciate E*TRADE’s relatively high fee for stock trading, but it more than compensates with a vast selection of mutual funds. Out of 9,000 available mutual funds, about 4,400 require zero transaction fees. As such, E*TRADE is one of the best IRA funds for clients who wish to greatly diversify their investment portfolio for the purpose of long-term mutual funds growth.
- Personal Capital — If you want someone else to manage your IRA for you, Personal Capital has a second paid plan that allows it. This is great for customers who don’t see themselves involved with high finance or don’t have time for it. Its free default version, you still get tons of benefits with Personal Capital’s Retirement Planner tool, 401k Fee Analyzer, and Asset Allocation Target. All three tools are perfect for coming up with a self-directed retirement plan.
- Webull — Gives you a productive balance between stocks and all the major cryptocurrencies. People find Webull’s chart-oriented system highly useful for tracking market trends. With Webull’s tools, you will be able to add individual stocks/cryptocurrencies on watch lists, track their performance, and act accordingly. On top of that, it seeks no commission fees for trading and no minimum balance. Webull offers a bonus if you contribute with $5,000 or more to your IRA, which can range between $50 to $330.
Advantages of an IRA
All of your contributions to an IRA will be tax-deferred until the maturation date—the time of withdrawal. This is regardless of your contribution’s tax status.
An IRA allows you to defer taxes on your income up until you are 70. The compound interest you gain over this period can make a significant difference
With an IRA, you can contribute to extra retirement savings, regardless if you are already covered by an employer. This amounts to $6,000 additional contributions, on top of your 401k funds.
If you do not have an employer-covered retirement plan, you can contribute $6,000 per fiscal year, (or $7,000 if you are older than 50), to an IRA. Then, when you file a federal income tax return, you can deduct from your income the contribution amount.As you change jobs, you will be able to roll over every employer-sponsored retirement plan to an IRA.
Disadvantages of IRAs
You are taxed whenever you withdraw your funds from an IRA. Regardless, you will likely report less income upon retirement, which means you would pay less tax when withdrawing than when you made your contributions.
You can only contribute $6,000 per fiscal year, or $7,000 if you are older than 50.
You receive early-withdrawal penalties. If at any time before you turn 59.5, you withdraw funds, you will be charged with an extra 10% tax. Exceptions to this rule must be well-documented, relating to medical expenditures, higher schooling, or first home purchases.
An IRA doesn’t facilitate investments in life insurance, precious metal coins, antiques, and valuable collectibles.
Your AGI — Adjusted Gross Income — determines the amount from your deductions, (unless you are covered by an employer-sponsored retirement plan).
What to Consider when Choosing an IRA
By considering the reviews of online brokerage platforms, banks, insurance companies, and mutual fund companies, you should gain a clearer picture of their shortcomings and advantages. This way, it’s easy to find out which IRA trustees are most closely aligned to your needs. The online brokerage platforms we mentioned above offer the highest degree of flexibility to manage your IRA.
IRA FAQ
What is an IRA?
Individual Retirement Accounts are accounts within a financial institution that provide you with an opportunity to enjoy tax-free growth or tax-deferred status on your savings/retirement contributions.
What is the best IRA to have?
IRAs are available in two types: traditional and Roth. With the former, your contributions are tax-deferred with taxable withdrawals, while the latter IRA your contributions are taxed but with tax-free growth. Roth IRAs also facilitate withdrawal at age 59.5 without penalties.
Additionally, rollover IRAs allow you to transfer contributed money from an employer-sponsored retirement plan to a traditional IRA.
Who has the best IRA plans?
Personal Capital provides an overall best experience, given the fact you can upgrade your account to a paid one and have all of your assets managed by a professional financial expert.
