How to Open a Roth IRA With a Major Online Brokerage Firm

Saving enough to maintain your standard of living in your golden years takes planning and consistent, smart investing. Luckily, most Americans have some excellent tax-advantaged tools at their disposal. One of the best is the Roth IRA.

A Roth individual retirement account (Roth IRA) is a tax-advantaged investment tool. For 2022, individuals who fall below certain income thresholds can contribute up to $6,000 per person, or $7,000 per person for those aged 50 and over, in after-tax money. For 2023, the contribution limits rise to $6,500 and $7,500 respectively. Then, that money can be invested in mutual funds, stocks, bonds, or exchange-traded funds (ETFs).

How to Set Up a Roth IRA

Opening a Roth IRA with an online brokerage firm is simple and relatively uniform across most major companies. Here are the steps you’ll need to take for five of the most prominent brokerages:

Charles Schwab

Charles Schwab displays several orange “Open an Account” buttons on their home page. Click on any one of them, then click the orange “Roth IRA” button on the subsequent page to get started. Here is what you will need for each page in the application process:

1. For the personal information page, you’ll need to enter your name, email address, Social Security number (SSN), date of birth, and mother’s maiden name.
2. Next, create a login and password. You’ll also choose a security question on this page.
3. On the next page, you’ll have to enter your legal address and phone number, in addition to choosing your mailing preferences.
4. Enter your employment status, annual income, and liquid net worth on this page.
5. You’ll find your regulatory disclosures on this page. You’ll also be able to choose whether to add a trusted contact.
6. If you choose to add a contact, you’ll then have to enter their name and email address.
7. Choose your optional features here: paperless communications, Schwab trading services, options trading, and limited margins.
8. You can add your beneficiary information on this page, if applicable. If you choose to add this now, you’ll need their date(s) of birth.
9. Finally, consent forms. You’ll have to consent to the use of electronic records and signatures, the brokerage account agreement, disclosure, and terms; Internal Revenue Service (IRS) tax withholding status; etc.
10. Your account has been created! You can now fund it by transferring money online, depositing a check with the app, mailing a check, or dropping off a check to a physical location.

Fidelity

From any Fidelity web page, start by clicking on “Log In” near the top, and you should find an orange “Open an account” button near the bottom of the subsequent page. Choose “Open a Roth IRA,” then “Get Started”:

1. Are you already a Fidelity customer? If so, you can easily open an account using your saved information by clicking “Yes” on the first page. If not, then press “No.”
2. You’ll need to enter the following pieces of personal information on the next page: your name, SSN, date of birth, country of citizenship, phone number, email address, and promo code (if applicable). At the bottom of this page, there’s a separate section to enter your legal address.
3. On the job status page, you can choose from a drop-down menu with options such as “employed,” “self-employed,” “retired,” “unemployed,” etc. Once you’ve made your selection, a pop-up box appears asking for further employment details. Your regulatory disclosures also appear here.
4. Next, you have a chance to review your information. This page allows you to choose your core position, either a Fidelity Government Money Market Fund or a Federal Deposit Insurance Corp. (FDIC)-Insured Deposit Sweep Program, in addition to displaying all of your disclosures. At the bottom of the page, you’ll hit “Open Account.” Note that by doing so, you agree to all disclosures.
5. Congratulations, you’ve opened your Fidelity Roth IRA account! You can find your new account number on this page.
6. Finally, you’ll be able to set up your Fidelity username and password.
7. Once you’ve set up your account, you may fund it by transferring from your checking or savings account, transferring IRA assets from other institutions, or by check, wire transfer, or direct deposit.

Vanguard

Vanguard offers several sites to choose from if you visit Vanguard.com. Click “Personal investors” in the box on the right or from the “Our Sites” drop-down menu in the top left to take you to the appropriate web page.

1. Start by clicking either of the two “Open an account” buttons on this page. On the subsequent page, you can choose to either “Start your new account” or “Start your transfer or rollover.”
2. After choosing to start a new account, you’ll be asked on the following page how you would like to fund your account: bank transfer (funding now or later), rollover from an employer plan, or investment account transfer from another firm.
3. Do you already have a login? If not, click “Continue” under the the “No, I’m new here” box. You’ll be led to an introductory page that lists all of the information you’ll need and the steps you’ll have to take.
4. On the next page, choose “Retirement investing (brokerage IRAs)” from the provided options, then “Roth IRA” when the “Account types for this purpose” box appears.
5. Next, you’ll have to enter the following personal information: name, email address, date of birth, SSN, citizenship, and gender.
6. Enter your physical and mailing address, in addition to your phone number, on the following page. You’ll then get a pop-up screen to review your information.
7. You’ll then need to upload a digital photo of your driver’s license, state-issued ID, or passport.
8. Next, set up your username and password, in addition to consenting to e-delivery and Vanguard’s website terms of use. You’ll then have to select three security questions on the subsequent page.
9. You’ll then enter your banking login credentials or manually link your bank account as part of the authentication process, which typically takes two to three business days.
10. Once the authentication is complete, you’ll need to input an initial contribution amount. On the subsequent screen, you’ll have the option of either reinvesting your dividends and capital gains or transferring the money to a money market settlement fund.
11. Finally, review the information and submit your application. In about five days, you should receive a follow-up email from Vanguard confirming that your account has been approved and illustrating what the next steps are.

TD Ameritrade

TD Ameritrade prominently features their “Open New Account” button in several places on their home screen.

1. After clicking “Open New Account,” click on “Roth IRA” under “Most Common” on the following page, then click the green “Open a Roth IRA” button.
2. Enter your personal information, starting with your name, email address, physical address, and phone number, and then agree to the privacy statement. If you already have a TD Ameritrade account, you can autofill this information by clicking “Use my existing account info.”
3. On the next page, enter your date of birth, citizenship, SSN or Individual Taxpayer Identification Number (ITIN), employment status, and employment information. You’ll also be asked about the intent of the account.
4. Enter your financial details on this page, including your annual income, net worth, liquid net worth, source of funds for the initial deposit, and ongoing funding source. You’ll also have to answer regulatory questions, such as whether you or any of your family members are employees of brokerages or security exchanges and whether you own more than 10% of a publicly traded company.
5. On this page, you’ll be able to review all information entered thus far.
6. Here you will need to accept all disclosures and agreements, including client agreements.
7. Finally, set up your login. You’ll need to choose a user ID and password as well as select an account security method, either two-factor identification using text messages or a security question.
8. Your account is now open! You can then continue to fund your account and choose your investments.

E*Trade From Morgan Stanley

There are three purple “Open an account” buttons on the home page of E*Trade from Morgan Stanley. Click on any one of them to get started.

1. Start by choosing your account type: First, check off the box next to “Retirement account,” then do the same for Roth IRA on the subsequent screen.
2. If you’re a new customer, leave the bubble checked “No” and click “Continue.” Next, enter your personal information: name, phone number, and email address. The subsequent page then requests your residential and mailing address.
3. On this page, you’ll have to enter your SSN and your date of birth.
4. Enter your employment information on this page, including the occupation, field, and business address.
5. Next, you’ll need to fill out your retirement investment profile. Explain your objective for this account, and then list your annual income, liquid net worth, total net worth, investment experience, marital status, and number of dependents. You can also indicate whether you’re interested in options and futures trading here.
6. On this page, answer the standard regulatory questions about your relationships with brokers and securities exchange employees.
7. Here you’ll get to define the purpose of the account by choosing how you’re going to fund it and what your savings goals are.
8. Next, you’ll be able to decide what to do with your uninvested cash reserves: either a retirement sweep deposit account or a cash balance program. You can also add a trusted contact here.
9. On this page, you’ll have the chance to review your retirement agreements and disclosures.
10. Finally, create your user ID and password. Once you hit submit, your account is open and ready to be funded!
    

The Bottom Line

A Roth IRA is an excellent tool for saving for your retirement. With major brokerages offering an online setup, it has never been easier to begin investing with a tax-advantaged account. Using just a few key pieces of information, you can start your individual investing journey.

Just remember, opening a Roth IRA is only the beginning to achieving optimal asset allocation. Consistently contributing to your Roth IRAs and using the free research and planning tools available with the major online brokerage firms to open up a diversified portfolio and monitor performance can help savers reach their retirement goals.