How it works.
It's convenient and easy to open a Roth IRA. Apply online or by mail, or call us at 866-855-9095 to get assistance from a Schwab investment professional.
What is a Roth IRA?
A Roth IRA is an Individual Retirement Account to which you make contributions with after-tax dollars. The benefits of a Roth IRA are that your contributions can grow tax-free, and withdrawals are tax- and penalty-free after you've had the account for five years and are at least age 59½.
Traditional or Roth IRA—what's the difference?
A key consideration is whether it makes more financial sense to take advantage of immediate tax benefits or enjoy tax-free withdrawals in retirement. With a Traditional IRA, you may get immediate tax benefits, but you'll have to pay ordinary income tax on your contributions and earnings when you take money out in retirement. With a Roth IRA, there are no immediate tax benefits, but contributions and earnings can grow tax-free. All withdrawals can be taken out tax-free and penalty-free provided you're 59½ or older and you have met the minimum account holding period (currently five years).
Are there Roth IRA contribution limits I should know about?
You make Roth IRA contributions on an after-tax basis, and your maximum Roth IRA contribution will depend on your earned income level. You can contribute up to $5,500 per year for tax years 2016 and 2017 ($6,500 if you are at least age 50) or up to 100% of earned income, whichever is less. Income limits apply.
Understanding Roth IRAs
Looking for more information before you open a Roth IRA? Check out these educational resources.
Use the calculators below to compare the benefits of a Roth IRA vs. a Traditional IRA and more.
- Roth vs. Traditional IRA Calculator
Enter a few step-by-step details to see which type of IRA you're eligible for.
- Roth IRA Conversion Calculator
Does it make sense to convert your Traditional IRA to a Roth IRA? This calculator can help you decide.
- Retirement Savings Calculator
Use this calculator to find out where you stand today with your retirement savings and what to do next.
What clients think about our Individual Retirement Accounts (IRAs):
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Investors should consider carefully information contained in the prospectus, including investment objectives, risks, charges, and expenses. You can request a prospectus by calling 800-435-4000. Please read the prospectus carefully before investing.
Investment returns will fluctuate and are subject to market volatility, so that an investor’s shares, when redeemed or sold, may be worth more or less than their original cost. Unlike mutual funds, shares of ETFs are not individually redeemable directly with the ETF. Shares are bought and sold at market price, which may be higher or lower than the net asset value (NAV).
1. See the Charles Schwab Pricing Guide for Individual Investors (the “Guide”) and any amendments to the Guide for comprehensive details on fees.
2. The $1,000 minimum required to open an account is waived if you set up an automatic monthly transfer of $100 through direct deposit or Schwab MoneyLink® or open a Schwab Bank High Yield Investor Checking® account linked to your brokerage account.
3. Restrictions apply: The $4.95 commission does not apply to foreign stock transactions, large block-trading transactions requiring special handling, or restricted stock transactions. All broker-assisted and automated phone trades are subject to service charges. See the Charles Schwab Pricing Guide for Individual Investors for details. Employee equity compensation transactions are subject to separate commission schedules.
4. Conditions Apply: Trades in ETFs available through Schwab ETF OneSource™ (including Schwab ETFs™) are available without commissions when placed online in a Schwab account. Service charges apply for trade orders placed through a broker ($25) or by automated phone ($5). An exchange processing fee applies to sell transactions. Certain types of Schwab ETF OneSource transactions are not eligible for the commission waiver, such as short sells and buys to cover (not including Schwab ETFs). Schwab reserves the right to change the ETFs we make available without commissions. All ETFs are subject to management fees and expenses. Please see the Charles Schwab Pricing Guide for Individual Investors for additional information.
Charles Schwab & Co., Inc. receives remuneration from third-party ETF companies participating in Schwab ETF OneSource for record keeping, shareholder services and other administrative services, including program development and maintenance.
Schwab ETFs are distributed by SEI Investments Distribution Co. (SIDCO). SIDCO is not affiliated with Charles Schwab & Co., Inc. Learn more at Schwab ETFs.
5. Provided you are age 59½ or in the case of death, disability, or to pay up to $10,000 toward the purchase of a first home..
6. The consultation is complimentary, although the implementation of any recommendations made during the consultation may result in trade commissions or other fees, charges, or expenses. The retirement consultation is available only to clients with at least $25,000 in assets at Schwab or prospects with at least $25,000 in assets available to bring to Schwab. Individualized recommendations are available only to Schwab clients and are limited to assets held in a Schwab retail brokerage account. Information provided to prospects, or pertaining to assets held outside of Schwab, as part of the consultation are examples of the kinds of recommendations available on assets held at Schwab; these examples do not constitute recommendations, solicitations or investment advice.