Charles Schwab Review

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Charles Schwab IRA Review 2016: Pricing, Fees, Minimums, Pros/Cons, and Promotions for Traditional, SEP, Simple, Rollover IRA Accounts




Charles Schwab IRA Overview


Investors planning for retirement should consider Schwab, a discount broker that offers Individual Retirement Accounts (IRA's) and much more. With helpful retirement specialists, this broker is worth checking out.


IRA Account Types


Schwab offers different types of IRA’s. Investors can choose from Traditional, Roth, Inherited, Rollover, and Custodial. A Traditional IRA is designed for investors who will be in a lower tax bracket during retirement, whereas the Roth was built for investors who will be in a higher tax bracket after working. As the name implies, an Inherited IRA is a retirement account that has been inherited from a deceased person's estate. The Rollover IRA is an IRA that has been converted from an employer-sponsored plan. Finally, the Custodial IRA was created so that parents could help their children save and invest. These funds can be used for retirement, or in certain cases, for education expenses and to purchase a home. Schwab has retirement specialists who can assist clients with establishing an any type of IRA.


Charles Schwab IRA Fees and Minimums


Charles Schwab IRA Fees and Minimums


All retirement accounts have no annual fee, no setup fee, and no inactivity fee. The broker requires a minimum opening deposit of at least $1,000 for all IRA types except the Custodial account. This $1,000 requirement can be waived with regular $100 monthly deposits. The Custodial account has a $100 minimum opening deposit.

After the retirement account is opened, Schwab’s regular brokerage commission schedule applies. This includes $8.95 stock and ETF trades. Using a human broker to place a trade tacks on an extra $25. Alternatively, using the broker's automated phone system is just an additional $5.


Mutual Funds


The above trading commissions can be avoided by investing in funds. Retirement savers who are interested in mutual funds will not be disappointed with Schwab. The broker offers more than 5,000 mutual funds for investors to trade. More than 3,500 of these are OneSource funds, which always have no load and no transaction fee. There is a very steep $76 commission to purchase transaction-fee mutual funds, although there is no fee to sell.

The broker also maintains a list of exchange-traded funds that are free to trade. Schwab offers its clients more than 200 commission-free ETF's, many of which have lower expense ratios than the OneSource mutual funds. The ETF's provide a wide selection of investment tactics that may appeal to retirement investors. These include defensive equity, investment-grade bonds, REIT's, and a few S&P 500 funds.


IRA Calculators


Schwab has some useful calculators to help investors determine if and when distributions from an IRA must be taken under IRS regulations. The calculators specify the minimum amount that must be withdrawn from the account, and when the withdrawal must occur. Finally, the calculator determines when the account will be closed.


Charles Schwab IRA Review


Roth IRA Conversion Calculator


The broker also has a handy calculator for investors who are considering converting a Roth IRA to a Traditional. Users simply input required data into the tool, such as tax bracket, date of first withdrawal, and account value. The calculator then determines if making the conversion would be profitable or not.


Charles Schwab IRA Review



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IRA Videos


The broker has a good library of educational videos on its website relating to retirement accounts. These videos cover a variety of important topics, such as how to rollover a 401(k) into a Roth IRA, using an IRA for estate planning, and account recharacterization.


IRA Investing with Schwab's Intelligent Portfolios


An IRA can be managed by Schwab Intelligent Portfolios. This is a computerized investment advisory service that creates and monitors an account at no charge. This automated service builds a diversified ETF portfolio. There are no advisory fees or account service fees with the service. There are also no commissions charged for the trades in the account. To qualify for this service, an initial deposit of at least $5,000 is required.


Charles Schwab IRA Review


Retirement Income Planning


Also on Schwab's website is a useful tool to help investors analyze their retirement planning, and compare their plans with what Schwab recommends. A retirement income planning quiz covers areas such as what types of income are best for retirement, from what types of accounts withdrawals should be made first during retirement, and how often a retirement account should be rebalanced.


Comparison


Schwab's $1,000 minimum opening deposit requirement for most of its IRA's is exactly $1,000 higher than what several other brokers currently require. TD Ameritrade (IRA review), Etrade (IRA review) and Fidelity (IRA review) have no minimum, for example. On the other hand, Schwab's educational and research tools for retirement planning are much better than what OptionsHouse and Firstrade offer. Schwab also provides more commission-free funds than many other brokers, such as Merrill Edge. Funds without trading fees should appeal to retirement savers.


Charles Schwab IRA Review Recap


Charles Schwab, with low fees and a variety of IRA's, is a good choice for retirement savers. Investors who need personal guidance with retirement planning can find assistance at one of Schwab's 325 branch locations, or over the phone 24/7. Anyone looking for the best pricing in their IRA will find that in Scottrade (IRA review) or TradeKing (IRA review).


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Updated on 4/18/2016.



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