TD Ameritrade 300

Best Brokerage Company for an IRA Account



Overview of Opening an IRA at TD Ameritrade


TD Ameritrade is mostly known in the brokerage world for its advanced and free trading technology. Less well known is the firm’s selection of Individual Retirement Accounts. The company’s new commission schedule applies to IRA’s, so trading equities gives pensioners a good value here. Let’s take a detailed look at the firm’s retirement offerings and see what makes it one of the best brokerages for IRA.


IRA’s Available at TD Ameritrade


There are a variety of IRA’s that TD Ameritrade offers its clients. Different account types have different tax and contribution policies. Knowing these regulations beforehand can help you to make the right choice.

The most common IRA that TD Ameritrade customers can open is the Traditional account. It has an annual contribution level of $5,500, which increases to $6,500 for savers over 50 years old. Contributions are tax deductible, and withdrawals are taxed. This makes the account perfect for people who think they’ll be in a lower tax bracket after work.

The Roth is the reverse of the Traditional. Contributions aren’t tax deductible, but withdrawals are never taxed. The contribution levels are the same.

For small businesses, TD Ameritrade offers SIMPLE and SEP IRA’s. The SIMPLE account can be established by a business with no more than 100 employees, and the contribution limit is $12,000 per year.

The SEP account has a different contribution limit: $53,000 or 25% of an employee’s salary, whichever is lower. Contributions are made only by the employer, and the tax implications are the same as the Traditional IRA. Unlike a 410(k) plan, there is no vesting period for a SEP account.

The broker also offers a Minor IRA. This comes in both Roth and Traditional versions. The account helps parents to save for their children’s retirement. Obviously, it is used mostly by wealthy families.

The TD Ameritrade website has very clear instructions to make the account opening process quick and simple. An on-line form leads users step-by-step to get an IRA set up and funded. The broker also has retirement and new account specialists who can be reached over the phone. They can provide assistance with moving an old IRA to the broker, or transferring an employer’s plan to TDA.


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IRA Resources


Pensioners who need to brush up on finance and investing will find excellent resources on TD Ameritrade’s website. There are articles and videos that discuss many different topics. Some of these pertain to securities, others to finance in general.

One article talks about making withdrawals from an IRA before and after age 70½. Another discusses retirement accounts for businesses. Helpful videos go over issues such as 401(k) rollovers and paying taxes on brokerage accounts.

There’s a good selection of IRA calculators on the company’s website as well. These help pensioners assess various issues, such as the advantages and disadvantages of delaying retirement by 1 year. Another calculator determines the amount of monthly income you can expect to receive during retirement based on a variety of inputs. These include annual rate of return on investments, current age, expected years of retirement, and any Social Security income.

Another useful tool is the broker’s Selection Wizard. It takes numerous data points, such as the user’s age, tax status, annual income, and balances in other retirement accounts. It then makes a recommendation for a Roth or Traditional account based on the inputs.

Retirement Planner is a very useful calculator that determines if you’re saving enough every month for life after work. It asks questions such as age at retirement, monthly living expenses, pension balances, and current age. The Planner then suggests an amount to save annually in order to meet or exceed retirement expenses.


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The Cost of an IRA


TD Ameritrade does not charge anything to open and fund a retirement account. In fact, an IRA can be opened with a $0 balance. There is no annual, low-balance, or inactivity fees, either. Surprisingly, the company does not charge an IRA closeout fee. Most brokers do charge something to close a retirement account. Transferring a full IRA to another firm incurs a $75 charge, while partial transfers are free.

A recent price war in the brokerage industry forced TD Ameritrade to reduce its stock and ETF commission from $9.99 to $6.95. This places the broker in the low-cost category.

The firm has a $44.99 charge for placing a trade over the phone with the help of a live representative. Using the broker’s automated phone system is $10 cheaper.

TD Ameritrade also imposes a $2 fee for paper statements for accounts with less than $10,000 in assets. Trade confirmations are free in hard-copy format, and e-statements are also always free.

Fixed-income can be a safe investment for pensioners. Treasury bonds cost $25 at auction. Corporate bonds carry a markup or markdown. This means that there isn’t a commission, but the price of the bond is adjusted to compensate the brokerage house.


Managed Accounts


The firm offers portfolio management and investment advice through its affiliate TD Ameritrade Investment Management. Retirement savers who need extra assistance may want to consider these services.

Selective Portfolios is an investment advisory service that costs between 0.75% and 1.25% and requires a $25,000 minimum deposit. The exact fee is based on account balance and investment style. Both ETF’s and mutual funds are available.

Another service is called Essential Portfolios. This option is a computerized system that invests only in low-cost ETF’s. It costs a much cheaper 35 basis points, and the minimum balance is only $5,000.


Current Promotion for IRA's


TD Ameritrade is offering free trades for two months for any new IRA opened with at least $3,000. This would be a good opportunity to try out the broker’s sophisticated trading technology, including its flagship desktop platform Thinkorswim. It’s free to use. A $100 cash bonus is also available to a transferred account worth $25,000 or more. Promotion link: Trade free for 60 days + get up to $600. TDA


ETF's and Mutual Funds


Investors who decide to go it alone have excellent choices at TD Ameritrade. The broker provides 101 exchange-traded funds that are free to trade. There is a $19.99 charge when one of them is sold in less than 30 days after purchase. An ETF center on the broker’s website has good instructional material on the securities along with handy search tools.

Mutual fund investors also have excellent resources at TD Ameritrade. The broker’s screener is very user-friendly and returns over 13,000 products that are open for investment. Of these, 3,710 carry no load and no transaction fee.

Funds that aren’t on the broker’s NTF list cost $49.99 on both the buy and sell sides. There is also a short-term redemption fee for NTF funds of $49.99 if they are sold in less than 6 months after purchase. This fee is in addition to anything the fund charges for short-term trades.

TD Ameritrade customers have access to target-date funds. They were created for investors saving for life after work. These funds become more conservative as the target-date approaches. They do this by selling equities and buying debt. Some of the target-date funds at TD Ameritrade come with no load and no transaction fee.


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Best Brokerage For IRA Recap


There are very good retirement resources at TD Ameritrade that other brokers either don’t offer or charge more for. With free technology and a new, low $6.95 commission, it is one of the best brokerage firms for an IRA account.


Open TD Ameritrade IRA Account



Trade free for 60 days + get up to $600. TDA

Open TD Ameritrade Account


Updated on 4/14/2017.





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