When leaving a job, many people forget about their 401(k), letting it sit in an old employer’s plan. This often leads to missed opportunities for better investment options and lower fees.
If you’re in this situation, rolling your 401(k) into an IRA can give you more control over your retirement savings.
In this guide, we’ll explore the best rollover IRA providers, highlighting their unique features and benefits to help you make an informed decision.
Why Roll Over Your 401(k)?
Rolling over a 401(k) to an IRA offers several advantages:
- Lower Fees: Many 401(k) plans charge high administrative fees, which can eat into your savings.
- More Investment Options: IRAs typically provide a broader range of investments than most 401(k) plans.
- Consolidation: Managing all your retirement funds in one place simplifies tracking and planning.
“Depending on your plan and what you’d like to invest in, 401(k) fees can be high. You may save money and find a wider range of investment options by rolling it over to an IRA,” says NerdWallet.
Best Rollover IRA Providers
NerdWallet has analyzed over 60 providers to find the top options for both automated (robo-advisors) and DIY investors. Here’s a breakdown of the best providers:
1. Robinhood IRA
- Fees: $0
- Account Minimum: $0
- Promotion: 1% match on eligible contributions (up to IRA limits).
- Why We Like It: Robinhood’s 1% match is a standout feature, making it one of the few brokers offering this benefit typically seen in employer-sponsored plans. Additionally, it provides commission-free trades and investment recommendations.
- Cons: No access to mutual funds or individual bonds.
2. Charles Schwab
- Fees: $0 per online equity trade
- Account Minimum: $0
- Promotion: None currently.
- Why We Like It: Schwab offers a wide selection of no-transaction-fee mutual funds, excellent customer service, and powerful retirement planning tools.
- Cons: Low interest rates on uninvested cash and high fees for certain funds.
3. Interactive Brokers (IBKR Lite)
- Fees: $0 per trade
- Account Minimum: $0
- Promotion: None currently.
- Why We Like It: IBKR Lite offers a vast range of investments, including 19,000+ mutual funds, and excels in order execution quality. It’s a strong choice for both beginners and advanced investors.
- Cons: High minimum to earn interest on uninvested cash.
4. Betterment
- Fees: 0.25% management fee (or $4/month for smaller accounts)
- Account Minimum: $0
- Promotion: 1% match on Roth and traditional IRA contributions until December 30, 2024.
- Why We Like It: Betterment’s goal-based tools and diverse investment options (including socially responsible portfolios) make it ideal for hands-off investors.
- Cons: Additional fees for access to financial advisors.
5. Wealthfront
- Fees: 0.25% management fee
- Account Minimum: $500
- Promotion: $50 customer bonus for first-time investors.
- Why We Like It: Wealthfront excels as a robo-advisor with features like tax-loss harvesting and access to multiple IRA types, including SEP and rollover IRAs.
- Cons: No access to human advisors.
Factors to Consider When Choosing an IRA Provider
When selecting an IRA provider, keep these factors in mind:
- Fees: Look for low or no fees, especially for account management and trades.
- Investment Options: Consider the range of available investments, such as ETFs, mutual funds, and stocks.
- Tools and Resources: Access to planning tools, calculators, and research can help optimize your retirement strategy.
- Promotions: Some providers offer bonuses or matches that can boost your savings.
Key Takeaways
- Rolling over a 401(k) to an IRA can help reduce fees and expand investment options.
- Providers like Robinhood and Betterment offer unique benefits like contribution matches, while Schwab and Interactive Brokers excel in customer service and investment variety.
- Consider your investment style and retirement goals when choosing a provider.
Conclusion: Take Control of Your Retirement
Rolling over your 401(k) into an IRA is a smart move for most people, offering lower fees and greater flexibility. Whether you prefer automated investing or a hands-on approach, the providers listed here cater to various needs. Evaluate your options and take the first step toward optimizing your retirement savings today.
