How to Open an IRA in 4 Steps

You can open an IRA online in a few steps. It can go quickly once you find the right provider for your needs.
Andrea Coombes
Arielle O'Shea
By Arielle O'Shea and  Andrea Coombes 
Edited by Chris Hutchison

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Individual retirement accounts or IRAs are important tools that help you save and invest for retirement. Unlike 401(k)s, which can only be accessed through workplace programs, IRAs are open to virtually anyone. Opening one is easy, and once you've done that, you can take your time funding the account and making investment selections. Here's how to get started in four steps.

How to open an IRA

1. Decide between an online broker or a robo-advisor

What sort of investor are you — hands-on or hands-off? Your answer will help determine whether you should set up an IRA with an online broker or a robo-advisor.

  • If you want to choose and manage your investments, you’ll need an online broker. Here you’ll open an account and buy and sell investments yourself over time. We’ll give you some tips on how to choose a broker below.

  • If you’d like an automated way to manage your investments, consider a robo-advisor. A robo-advisor will choose low-cost funds and rebalance your portfolio, keeping it in line with your investing preferences and timeline — for a fraction of the cost of hiring a human financial advisor. Keep reading for more on what to look for in a robo-advisor.

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2. Choose where to open your IRA

Once you’ve identified your investing style, the next step is choosing a provider that fits your preference.

For hands-off investors

Robo-advisors are great for those who agonize over investment decisions. Look for one with a low management fee — generally 0.40% or less — and services that meet your needs. Automatic rebalancing and portfolio allocation are usually standard, but others — such as access to human financial advisors — can vary by provider.

For hands-on investors

Look for a broker that has low or no account fees and small commissions; offers a wide selection of no-transaction-fee mutual funds and commission-free exchange-traded funds; and provides solid customer support and educational resources, especially if you’re a new investor.

Also, pay attention to account minimums and any investment minimums. Some mutual funds may require a minimum investment of $1,000 or more. An ETF can be purchased by the share, making it less expensive to get into, especially if you choose a commission-free fund.

» Check out all of our top picks for best IRA accounts

3. Open an account

The actual steps will vary slightly by provider, but opening an IRA is pretty easy. In general, you’ll head to the provider’s website, choose the type of IRA you want to open (Roth or traditional) and fill in some personal details such as your Social Security number, date of birth, contact information and employment information. Once you've opened the account, you'll see your options for how to fund it.

4. Fund your account and get started

Once you’ve decided where to open your account, you’ll need to select how you want to fund it. Usually you’ll do this by transferring funds from a bank account, transferring existing IRA assets from a different firm into your new account, or rolling over a 401(k).

Just remember that IRAs have an annual contribution limit of $6,500 in 2023 ($7,500 if age 50 and older), but you don't have to contribute that much. When it comes to retirement, starting with any amount early on is better than nothing. What's more, you don't have to fund it all at once. A common strategy, known as dollar-cost averaging, is to make regular contributions at regular intervals. For example, perhaps you stash away $100 per month in your IRA.

Both Roth and traditional IRAs also have income limits. However, traditional IRAs only have income limits if you or your spouse have a retirement account at work. Here are the Roth IRA income limits:

Filing status

2022-2023 Income range

Maximum annual contribution

Single, head of household or married filing separately (if you didn't live with spouse during year)

  • Less than $129,000 in 2022.

  • Less than $138,000 in 2023.

  • $6,000 ($7,000 if 50 or older) in 2022.

  • $6,500 ($7,500 if 50 or older) in 2023.

  • $129,000 up to $144,000 in 2022.

  • $138,000 up to $153,000 in 2023.

Contribution is reduced

  • $144,000 or more in 2022.

  • $153,000 or more in 2023.

No contribution allowed

Married filing jointly or qualifying widow(er)

  • Less than $204,000 in 2022.

  • Less than $218,000 in 2023.

  • $6,000 per person ($7,000 if 50 or older) in 2022.

  • $6,500 per person ($7,500 if 50 or older) in 2023.

  • $204,000 to $214,000 in 2022.

  • $218,000 to $228,000 in 2023.

Contribution is reduced

  • $214,000 or more in 2022.

  • $228,000 or more in 2023.

No contribution allowed

Married filing separately (if you lived with spouse at any time during year)

Less than $10,000

Contribution is reduced

$10,000 or more

No contribution allowed

Are you rolling over a 401(k)?

If you have a 401(k) from an old job, you can move those funds into your new employer’s retirement plan or into an IRA by doing a 401(k) rollover. For many people, rolling over into an IRA is the best option, given that IRAs tend to have a wider array of investment choices and lower fees than many 401(k)s.

The IRA provider will help you do this — many have “rollover specialists” on staff — but the basics are simple: You’ll contact your former employer’s plan administrator and complete a few forms, and they will send your account balance (via check or by wiring the funds) to your new provider.

» Ready to get started? See the best IRA providers for a 401(k) rollover.

Are you funding from your bank or brokerage?

You’ll need your account number and routing number. If you’re just starting out, it may be helpful to set up automatic transfers.

These limits cover multiple accounts, so if you have both a Roth and a traditional account, you’ll need to keep your total contributions at or under the maximum.

How should you choose your investments?

If you decide to use a robo-advisor for your IRA, you don’t actually need to choose your investments. Your robo-advisor will ask you for your goals and preferences and select investments that match up with them, and even adjust those investments over time. That’s it; you’re done.

If you’re going the hands-on route with an online broker, consider building a portfolio out of low-cost index funds and ETFs. This approach makes it easier to ensure adequate diversification in your portfolio (which lowers your investing risks) and helps minimize the fees you’ll pay.

You can explore this topic in more detail in our article on investing your IRA.

Benefits of an IRA

The benefits of an IRA and Roth IRA

Got more questions about how to open an IRA? We have answers

Many brokerages offer competitive IRAs. NerdWallet’s analysis of the best IRA accounts can help narrow your search and focus on the features that matter most to you.

Yes, many banks offer IRA accounts. But with a bank IRA, generally your money will go into a type of savings vehicle, such as a certificate of deposit, that offers a much lower rate of return than, say, a stock and bond portfolio might enjoy. For a long-term goal like retirement — where you have the time to let your account ride out any market declines — it makes sense to invest for growth. That's why we don't include banks on our top picks for best IRA accounts.

Anyone can open a traditional IRA but if you (or your spouse if you're married) contributes to a retirement plan at work, then there are income limits that might restrict your ability to deduct your IRA contribution.

Here are the traditional IRA income limits in 2020 and 2021 - these traditional IRA income limits apply only if you (or your spouse) have a retirement account at work:

Filing status

2022-2023 MAGI

Deduction limit

Single or head of household (and covered by retirement plan at work)

  • $68,000 or less in 2022.

  • $73,000 or less in 2023.

Full deduction

  • More than $68,000 but less than $78,000 in 2022.

  • More than $73,000 but less than $83,000 in 2023.

Partial deduction

$78,000 or more in 2022. $83,000 or more in 2023

No deduction

Married filing jointly (and covered by retirement plan at work)

  • $109,000 or less in 2022.

  • $116,000 or less in 2023.

Full deduction

  • More than $109,000 but less than $129,000 in 2022.

  • More than $116,000 but less than $136,000 in 2023.

Partial deduction

  • $129,000 or more in 2022.

  • $136,000 or more in 2023.

No deduction

Married filing jointly (spouse covered by retirement plan at work)

  • $204,000 or less in 2022.

  • $218,000 or less in 2023.

Full deduction

  • More than $204,000 but less than $214,000 in 2022.

  • More than $218,000 but less than $228,000 in 2023.

Partial deduction

  • $214,000 or more in 2022.

  • $228,00 or more in 2023.

No deduction

Married filing separately (you or spouse covered by retirement plan at work)

Less than $10,000

Partial deduction

$10,000 or more

No deduction

With a Roth IRA, you can never deduct your contributions — your money goes in after-tax — but there are income limits that restrict who can contribute to a Roth.

Here are the Roth IRA income limits in 2020 and 2021:

Filing status

2022-2023 Income range

Maximum annual contribution

Single, head of household or married filing separately (if you didn't live with spouse during year)

  • Less than $129,000 in 2022.

  • Less than $138,000 in 2023.

  • $6,000 ($7,000 if 50 or older) in 2022.

  • $6,500 ($7,500 if 50 or older) in 2023.

  • $129,000 up to $144,000 in 2022.

  • $138,000 up to $153,000 in 2023.

Contribution is reduced

  • $144,000 or more in 2022.

  • $153,000 or more in 2023.

No contribution allowed

Married filing jointly or qualifying widow(er)

  • Less than $204,000 in 2022.

  • Less than $218,000 in 2023.

  • $6,000 per person ($7,000 if 50 or older) in 2022.

  • $6,500 per person ($7,500 if 50 or older) in 2023.

  • $204,000 to $214,000 in 2022.

  • $218,000 to $228,000 in 2023.

Contribution is reduced

  • $214,000 or more in 2022.

  • $228,000 or more in 2023.

No contribution allowed

Married filing separately (if you lived with spouse at any time during year)

Less than $10,000

Contribution is reduced

$10,000 or more

No contribution allowed

The IRS doesn't require a minimum amount to open an IRA. However, some providers do require account minimums, so if you've only got a small amount to invest, find a provider with a low or $0 minimum. Also, some mutual funds have minimums of $1,000 or more, so you need to account for that as you choose your investments. But many investments have no or a low account minimum. Focus on those if you're on a tight budget.

There isn't typically an opening fee, though there are a few potential up-front costs. Some brokers and robo-advisors require a minimum amount to open an account, so you'll either have to come up with that dollar figure or choose a different provider. You'll also need enough money to purchase investments you want in your IRA. Some mutual funds have a $1,000, or higher, minimum investment; some investments don't have minimums at all. Some brokers also charge trading commissions when you buy or sell investments, typically $5 to $10. If you invest in mutual funds or ETFs, you'll pay an expense ratio and possibly other fees as well. The good news is many popular index mutual funds have very low fees — some charge 0.3% or less annually.

We've got a page dedicated to how to invest within your IRA. The good news is, you don't need to be an investing expert to pick appropriate investments for your IRA. But if you're still anxious about it, you can even consider opening your IRA with a robo-advisor, which will pick your investments for you based on your goals and risk tolerance. You can see our picks for the best robo-advisors for some inspiration.

Yes. Moving your funds from a 401(k) at a former employer to an IRA is a straightforward process, and most 401(k) and IRA providers are well-equipped to handle it. You can learn how it all works in our 401(k) rollover guide.

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