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Relatives have told me to get a roth ira, as I can use it to trade tax free in the account. I'm still new to this as I'm unsure which one to pick. Also I need to fund my roth ira before filing my taxes so I can credit it toward the previous year of 2017.

Currently my current trading account provider only has the following IRA plans, they only look like savings plans and not trading roth IRAs. Or am I wrong on that?

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I'm not sure which is the "best" provider for a roth ira. Which is the best place to get one as of 2018 March?

And am I correct that I can fund this roth ira to contribute to 2017 as I didnt file my taxes yet?

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  • who is your current trading account with? – Dustin Mar 16 '18 at 21:17
  • ally invest.... – Patoshi パトシ Mar 16 '18 at 21:36
  • I've had nothing but good experiences with Ally. I also had an account with Zecco which was bought by Tradeking which has now been bought by Ally, so I'd say that's a fine place to keep your account. – quid Mar 16 '18 at 21:41
  • what are you looking to trade? stocks ETFs or Mutual Funds? – Dustin Mar 16 '18 at 22:10
  • just stock etfs – Patoshi パトシ Mar 16 '18 at 22:12
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Roth IRA contributions can be made for 2017 up until April 17th, 2018.

Roth IRA contributions aren't used as credits since you are depositing post-tax funds. I think you mean to take advantage of your IRA contribution yearly limit, which is $5,500 for an individual under age 50, +$1,000 catchup Bonus over age 50.

I am currently shopping for Roth IRA to active trade as well and have found NerdWallet's reviews helpful. I'm not suggesting to take their rankings, simply the resources in one place can help narrow a list. As always DUE DILIGENCE is needed and verify with company before committing

As to which I'd suggest depends on what you plan to actively trade (stocks, ETFs or Mutual Funds). Things that would sway my choice are selection of commission-free ETF/Mutuals, minimum balance, and commission costs for stocks and excluded ETF/Mutuals.

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  • so which one did you go with? – Patoshi パトシ Mar 17 '18 at 4:00
  • @Patoshiパトシ i haven't decided yet. My needs might not be the same as yours, but if my answer helped you, you can accept it. – Dustin Mar 17 '18 at 10:35
  • The 'catchup' age is 50.0 (as of yearend) not .5. Perhaps you conflated with 59.5 when early distribution penalty stops, or (for trad only) 70.5-next-April when RMD starts? – dave_thompson_085 Mar 19 '18 at 0:36
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An IRA is just a tax umbrella for some assets. It's typical to form an IRA with a financial institution of some sort, Ally, Vanguard, Schwab, whatever. It's also typical to manage your IRA from a single custodian rather than having multiples, at least in a single tax year. Then inside your IRA you have your assets. Your assets may be cash in a savings account, certificates of deposit (CDs), treasury bonds, Mutual Fund units, ETF shares, you see where this is going.

Holding these assets under your IRA umbrella affords you certain tax benefits. Those particular options from Ally look like basic savings accounts because they are, but when held under an IRA you won't pay income tax on the interest income they generate.

So I just had a chat with an Ally rep, and it turns out that TradeKing at this point has simply been rebranded to Ally Invest, but still functions separately from Ally, so if you open the ROTH IRA at Ally, you'd be limited to the savings and CD accounts, but Ally Invest does also offer ROTH and Traditional IRA accounts for self directed trading; though I wouldn't open the account there as there are no zero commission Mutual Funds or ETFs. Personally, my ROTH IRA is with Schwab and I'd refer anyone who asked me there.

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There's few questions in here.

  1. Taxes - Roth IRA contributions have no tax implications, because they are made with after-tax money. Therefore making your 2017 Roth IRA contribution and filing your 2017 tax return are two independent things.

  2. Choices provided by your current provider - I believe you are right that these are very limited, and offer a comparatively low annual yield. On the other hand, these read as if the yield is guaranteed. Ultimately the choice is yours.

  3. The best provider - I don't believe there is a singular unconditionally best provider out there (or otherwise all the rest would have gone out of business). My advice would be to check which investment options are made available by different providers, and pick the one which appeals to you the most.

IRA account offers the same choices as a regular (non-tax advantaged) investment account, which is to buy and sell mutual funds, ETFs, stocks, listed securities, bonds and CDs.

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  • these accounts don't let you trade right? it looks just like savings accounts. – Patoshi パトシ Mar 16 '18 at 21:37
  • Edited the answer. – void_ptr Mar 16 '18 at 21:50
  • #1 is not completely true. since there is still an Individual's IRA contribution limit per year. – Dustin Mar 16 '18 at 22:11
  • @Dustin Not sure how contribution limit means there are tax implications. Can you elaborate? – void_ptr Mar 16 '18 at 22:15
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    @Dustin, void_ptr is saying that since this is a ROTH there will be no impact on the outcome of the tax return because a ROTH is contribution is after tax funds. In the case of a traditional IRA it makes sense to contribute before you complete your tax return because the contribution will likely impact your tax liability for the year. – quid Mar 16 '18 at 22:21
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Looks like you were right about Ally not having a Roth that comes with stock trading.

Here are a the ones listed on benzinga's "Best Online Brokerages" Ally Invest, TD Ameritrade, E-Trade, Charles Schwab, Fidelity

Most places have around $5 trades with the exception of TD Ameritrade. But TD has a lot more tools than the other brokers. So it might be worth a few bucks extra per a trade while you learn.

The drawback of learning in your Roth is that you are likely to lose money in the beginning. And you won't be able to write of those losses.

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