Charles Schwab doesn’t charge a maintenance fee for its Roth IRA. Schwab also doesn’t require a minimum investment to open an account.
Schwab fees: A breakdown
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Like many brokerages these days, Schwab lets you open a Roth IRA with whatever amount you choose. And once you establish your Schwab Roth IRA, you can start trading commission-free stocks, exchange-traded funds (ETFs) and options.
However, Schwab will charge commissions or fees for trading certain investments. Here’s a list of common charges for specific online trades.
| Investment | Commission/Fee |
| Options | $0 online base commission + $0.65 per contract fee |
| U.S. Over-The-Counter (OTC) securities | $6.95 |
| Mutual funds outside of Schwab OneSource Mutual Funds List | Up to $74.95 per purchase |
| Futures | $2.25 per contract |
| Futures options | $2.25 per contract |
| Canadian securities | $6.95 |
| Foreign stock transactions placed on the U.S. over-the-counter (OTC) market | $50 transaction fee |
| Treasuries | $0 |
| Corporate and municipal bonds | $1 per bond ($10 minimum and $250 maximum) |
Overall, Schwab’s fees are on par with those of similarly-sized competitors like Fidelity Investments. And it’s easy to open an account and begin trading conventional securities like U.S. stocks and ETFs with no commission charges. Schwab also offers thousands of mutual funds with no transaction fees.
But before you open a Roth IRA account, you should know if it’s right for you.
Roth IRA: Pros and Cons
A Roth IRA is a retirement savings vehicle that offers certain tax advantages. The money you invest in a Roth IRA grows tax free. And withdrawals are tax free if you make them after reaching age 59.5 and you’ve been contributing to the account for at least five years.
But unlike with a traditional IRA – also offered by Schwab – your contributions won’t be tax deductible. So investing in a Roth IRA won’t lower your taxable income for the year you contributed.
Still, there are other Roth IRA benefits to consider.
- You can withdraw contributions, but not earnings, penalty-and-tax free anytime
- No required minimum distribution (RMD): You don’t need to start withdrawing money from your account when you reach a certain age.
- You can invest in stocks, bonds, ETFs, mutual funds and more.
But keep in mind that the Schwab Roth IRA is a self-directed account. This means you choose your investments and manage your own portfolio. This may not be the best route for some. But hands-off investors can see if Schwab Intelligent Portfolios are right for them. You can also open a Roth IRA through this robo-advisor platform, which creates and manages a portfolio based on your individual financial goals.
Additionally, you can open a taxable brokerage account through Schwab.
Roth IRA eligibility requirements
To open and contribute to a Roth IRA, your Modified Adjusted Gross Income (MAGI) can’t exceed certain limits. Here are the rules at a glance.
- Single filers: MAGI must be under $161,000 for tax year 2024 to contribute to a Roth IRA.
- Married and filing jointly: MAGI must be under $240,000 for tax year 2024 to contribute to a Roth IRA.
Moreover, your MAGI also determined whether you can make the annual maximum contribution. For 2024, the Roth IRA maximum contribution is $7,000 or $8,000 if you’re age or older.
But after your MAGI breaches certain levels, your contribution limits decrease until they phase out based on the rules above. Here’s how it breaks down.
- Single filers: Maximum contribution for tax year 2024 begins to diminish when MAGI exceeds $146,000.
- Married and filing jointly: Maximum contribution begins to reduce when MAGI increases past $230,000.
Schwab Roth IRA: Where it stands
Roth IRA rules and functions are governed by the IRS, so they’d work similarly across brokerages. But Schwab has a few features worth noting.
Charles Schwab stands out for its suite of award-winning research tools. This includes expert-selected stock and ETF lists and stock screeners that let you look up stocks and funds based on your particular criteria such as market capitalization, industry and price performance. You’d also have access to market data and research from third-parties like Morningstar as well as Schwab experts. Experienced investors comfortable with picking and managing their own investments could find this useful.
But hands-off investors can open Roth IRAs through the Schwab Intelligent Portfolios platform. This is a robo-advisor service that creates and manages a diversified portfolio for you. One drawback to this robo, however, is a minimum investment of $5,000. You may find similar and lower-cost options at firms like Betterment and SoFi.
Overall, it’s important to weigh the benefits and potential drawbacks of this investing vehicle to see if the Schwab Roth IRA is a fit for you.
If you want to learn more about how Schwab can help you invest, take a look at our regularly-updated list of Charles Schwab guides, news and benefits.
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