Piggy bank and change in a jar labeled Roth IRA with text "Roth IRA for Beginners"

Things to Know When Looking for the Best Roth IRA for Beginners, According to Experts

Brad Chastain Director of Education U.S. Money Reserve

Written by Brad Chastain

Jan 27, 2024

Many Americans think about saving for retirement, but how many actually have a retirement account? According to data from the Board of Governors of the Federal Reserve System, 25% of non-retirees have no retirement savings at all, and of those who do, 55% have a 401(k) or 403(k). The Tax Policy Center notes that only 33% of American adults have a traditional or Roth individual retirement account (IRA).

The silver lining of this data is that Americans without retirement accounts have many options when it comes to saving for retirement, including starting a Roth IRA. Even if you’re among those who already have a traditional IRA, you may still have the option to open a Roth IRA and set aside even more money each year for retirement.

This article is our guide to finding the best Roth IRA for beginners opening their first retirement account of this type. It provides essential details on how Roth IRAs work and some items to consider when weighing account options.

Who Is Eligible for a Roth IRA?

As with many types of financial accounts, there are eligibility requirements for certain IRA accounts, including Roth IRAs.

Currently, Roth IRA eligibility requirements vary depending on your tax filing status:

Single: Modified Adjusted Gross Income (MAGI) of $161,000 or less

Married, Filing Jointly: Modified Adjusted Gross Income (MAGI) of $240,000 or less

Married, Filing Separately: Modified Adjusted Gross Income (MAGI) of $10,000 or less (if you have lived with your spouse at any time during the year)

Does your income exceed the Roth IRA limit for contributing to an account? If so, a backdoor Roth IRA may still be a possibility.

Factors You May Want to Consider When Selecting the Best Roth IRA for Beginners

There’s a lot to consider when you’re a Roth IRA beginner. If you’d like to explore additional details, you can find them in our IRA Beginners Guide. If you think an IRA may work for your retirement and are ready to get started, below are questions you may want to ask before you open a Roth IRA.

Is a Roth IRA or a 401(k) better?

More Americans have 401(k)s than IRAs, but are 401(k)s the better option? Can you have both?

One major difference between 401(k)s and IRAs is that a 401(k) is established through an employer whereas an IRA is opened by an individual through a bank or broker. For some, like those who are self-employed, an IRA may be their only option. Those with 401(k)s, however, should also be able to open Roth IRAs (eligibility permitting) to help them maximize their retirement savings.

The contribution limits are also significantly different for a 401(k) compared to an IRA. Annually, $23,000–$30,500 can be contributed to a 401(k) and $7,000–$8,000 can be contributed to a Roth IRA.

One last key difference between some 401(k)s and IRAs is how taxes are paid on contributions. Many 401(k)s only offer pretax contributions, with taxes then paid on withdrawals. The opposite is true for all Roth IRAs: Contributions always come from after-tax dollars, and withdrawals are therefore not taxed.

Is a Roth IRA or a traditional IRA better?

Another option to consider is a traditional IRA. Beginners with no existing retirement account who want to start with just one may wish to choose a traditional or Roth IRA. Our article on Roth vs. Traditional IRA further explains the key differences, which are briefly outlined below:

  • Distributions from a traditional IRA are tax-deductible for the year they are taken; distributions from Roth IRAs are not tax-deductible.
  • Withdrawals from a Roth IRA are not taxed; withdrawals from a traditional IRA are taxed as income.
  • Deductions for contributions phase out the higher your income becomes if you have a traditional IRA or a workplace retirement account.
  • While anyone can open a traditional IRA, Roth IRAs have eligibility requirements based on income.

It may be best to speak with a financial expert about the finer differences between traditional and Roth IRAs before deciding which is best for your unique financial situation. Which one you choose may come down to a specific detail, such as how you foresee your income changing over the years.

What are the allowable assets of a Roth IRA?

As mentioned, IRAs must follow certain regulations. Some of these regulations pertain to the types of assets that can be held in these accounts. Both traditional and Roth IRAs are thought to be advantageous because they allow for a wide selection of allowable assets. In fact, it may be easier to answer the question: What assets aren’t allowed in a Roth IRA?

There are just two main categories of assets that are not allowed as part of a Roth IRA: collectibles and life insurance policies

That said, the assets available for inclusion in a brokerage Roth IRA may be limited based on the specialty of that brokerage or your account manager. But whatever assets you decide to include, every Roth IRA essentially functions the same.

Is a precious metals IRA a type of Roth IRA?

Precious metals IRAs are another type of retirement account that has a few distinct benefits for beginners and experienced savers alike.

The first unique benefit of a precious metals IRA is obvious based on its name: Precious metals IRAs allow for the inclusion of a much wider range of assets, including and extending beyond IRA-approved gold and silver. This differs from conventional IRAs, which tend to be offered with a limit number of assets and asset types available for inclusion, and allows for greater portfolio diversification.

Another unique benefit of precious metals IRAs is that they can be either traditional or Roth IRAs, allowing you to select your preference between the two. Owning both is also allowed as long as you meet Roth IRA eligibility requirements.

Are Roth IRAs insured by the FDIC?

The Federal Deposit Insurance Corporation (FDIC) provides insurance protection for money held in qualifying deposit accounts so long as the account is held at an FDIC-insured bank. If the FDIC-insured bank should fail, the FDIC coverage would provide up to $250,000 per depositor.

However, whether an asset held in an IRA would be FDIC-insured varies depending on the asset in question. Stocks and mutual funds held in an IRA, for example, aren’t covered even if held at an FDIC-insured bank because these assets aren’t deposited in an account like a CD, savings account, or checking account.

If your IRA is not held by an FDIC-insured bank, that may not be cause for concern. When you open an account through a reputable distributor like U.S. Money Reserve, you can trust that your gold IRA will still be fully insured, as will the depository that holds your physical assets.

Selecting a Provider to Open Your Roth IRA

Once you decide that a Roth IRA is the best option for your retirement savings, your next step may be to select an IRA provider or custodian. Now that you have more information on how Roth IRAs work, here are a few questions you could use to continue your research and discover what different providers have to offer.

Are there minimum deposits and balances?

When comparing Roth IRA options, something you may want to consider is each provider’s minimum opening deposit and balance requirements. A provider’s account minimum requirements are separate from IRA regulations for withdrawals and contributions. Account minimums are completely at the discretion of the provider.

It’s always best to directly ask about account minimums for

  • initiating an account
  • account balances
  • contribution limits
  • withdrawals

There may also be maximum limits set by the provider, so you might ask for clarification on these as well before establishing an account.

Are there account fees to pay?

There could also be account fees associated with opening and maintaining an IRA. One such account fee is an advisory fee. An advisory fee, also known as an asset under management (AUM) fee, is very common. This fee covers the activities of the professional who manages the IRA on your behalf.  This fee is separate from account maintenance fees that are usually paid on a monthly basis. Maintenance fees for IRA accounts are often about $30–$50 per month according to Investopedia.

How the account fees are structured may also make a difference. There could be one-time fees connected to opening the account, annual fees that are a set amount, or fees based on the account’s balance. If the advisory fee is a percentage of the assets under management, you can often expect to pay between 0.5 and 1% of the assets that are held. Typically, smaller accounts have a higher fee of around 1% while larger accounts’ fees are closer to 0.5%, according to NerdWallet.

Individual assets held in an IRA may also require additional fees. Mutual funds, for example, have an expense ratio that must be paid regardless of the type of account in which they are held. In this case, the fee would be deducted from the assets of the mutual fund.

One way to avoid account fees is to opt for an IRA that’s self-directed. This means you are responsible for choosing all assets and managing the account through a custodian rather than having a financial professional make account-related decisions for you.

If you think a self-directed precious metals Roth IRA could be the best option for you, or if you want to expand your retirement portfolio, you can request a Gold IRA Information Kit, which further explains how alternative assets such as precious metals can be used to save for retirement.


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