June 15, 2019

Ally Invest Roth IRA

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Ally Invest's Roth IRA account has no annual fee and low trade commissions. Is it right for your retirement funds? Read on to learn how Ally Invest Roth IRA accounts work.

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Ally Invest Roth IRA at a Glance:

  • Minimum investment: $0
  • Annual fee: $0
  • Trade fees: $0 per trade for stocks & ETFs

(Read Reviews of Ally Invest)

Ally Invest Roth IRA Account Fees & Minimums

The following fees apply to Ally Invest IRA accounts:

  • IRA annual fee: $0
  • Minimum investment: $0
  • Inactivity fee: $0
  • IRA transfer fee: $50 (partial or full account transfers)
  • IRA closure fee: $25 (charged when all funds are removed from the IRA)

If you're doing a full transfer out of Ally Invest, you'll incur both a $50 transfer fee and $25 closure fee.

Ally Invest IRA Trade Commissions

Ally's trade fees are among the lowest in the industry. These are the commission costs and types of trades you're able to make in an IRA:

InvestmentCommission Costs
Penny StocksAdditional 1 center per share for stocks under $2
Stock and ETFs$0 per trade
Options$0 + $0.50 per contract (based on approval level)
Mutual Funds$9.95 to buy or sell no-load mutual funds
Bonds$1 per bond (minimum $10, maximum $250)
Treasuries$1 per bond (minimum $10, maximum $250)
CDs$24.95 per transaction
Broker-assisted Trades$20 + regular commission

Ally Invest also offers over 500 commission-free ETFs from Vanguard, GlobalX, WisdomTree, iShares and more.

All new accounts (no matter your opening deposit amount) will receive 90 days of free trades, up to $500 in value. In addition, you'll still be eligible for the up to $3,500 cash bonus as well.

Ally Invest IRA accounts do not have margin, short selling, and selling naked options.

Not all option trading strategies are allowed in IRAs. If you want to trade options in your IRA, your account must be approved for options trading.

Ally Invest IRA Cash-Enhanced Managed Portfolio

If you don't want to manage your own Roth IRA, Ally Invest also offers a robo-advisor service called Cash-Enhanced Managed Portfolio.

Ally will automatically build a portfolio for you based on your goals and risk tolerance. Your portfolio will be professionally managed so you don't have to worry about maintaining it.

Cash-Enhanced Managed Portfolio is free of advisory fees, which beats out many other robo-advisors. However, the catch is that 30% of your portfolio will be held in cash. Read more about it in our detailed review.

How Roth IRAs Work

A Roth IRA is an Individual Retirement Account. Investment earnings can only be withdrawn after you've reached a certain age.

With a Roth IRA, you are contributing money that has already been taxed in your paycheck. So you will not be taxed again when you take the funds out. All investment gains are tax-free too.

Here are some rules and facts about Roth IRAs:

  • Contributions are made with after-tax income.
  • Your withdrawals are tax-free after age 59½.
  • The maximum contribution per year is $6,000 ($7,000 if you're 50 or over).
  • You can't contribute if you earn over certain income limits (more below).
  • You can withdraw contributions anytime with no penalty.
  • As long as you're earning income, you can contribute no matter your age.

Difference between a Traditional IRA and Roth IRA:
With a Traditional IRA, your contributions are made with pre-tax dollars and are tax deductible. When you withdraw at retirement age, you'll have to pay regular income tax.

With a Roth IRA, your contributions are made with post-tax dollars and are not tax deductible. But when you withdraw at retirement, you won't pay taxes.

How to Open an Ally Invest Roth IRA Account

Opening an Ally Invest Roth IRA is easy and can be done in just a few minutes.

  1. Choose Approach
    First, decide if you want a self-directed or managed account.

  2. Register
    You'll be asked if you're new to Ally or an existing customer. If you're new, register with your name and email.

  3. Select Account Type
    Select which type of account you want to open. To open a Roth IRA, select IRA and then "Roth IRA".

  4. Basic Information
    Provide basic personal information, including address, phone number, marital status, and Social Security number.

  5. Fund Account
    Link a bank account. After you've funded your account, you'll be set up and ready to start trading. You can also open an Ally Invest IRA with $0 and fund it later.

How to Contribute to an IRA

You can fund your Ally Invest Roth IRA account the following ways:

  • Bank Wire
    This is the fastest way to fund your account. Bank wires can take just a few hours to one business day. Make sure you indicate the contribution year on your wire.

  • Mail-in Check
    Snail mail may take a couple of days, but Ally Invest will process it as soon as they receive it and verify the check. Again, indicate the contribution year on your check.

  • Online Transfer
    You can link your bank accounts and make online transfers whenever you wish or set up automatic recurring contributions. This is the most convenient, but not the fastest. It takes time to process the transfer and there's a clearing period of 3 business days.

  • Journal of Cash
    If you already have an Ally Invest individual or joint account, you can perform a journal of cash from the existing account to the new IRA account.

Roth IRA Contribution Limits

For 2019, here are your Roth IRA annual contribution limits:

  • $6,000 for those under age 50
  • $7,000 for ages 50 and over

Roth IRAs have income limits. For 2019, single filers can make the full contribution if you make less than $122,000/year, and a limited contribution if you earn up to $137,000.

Joint married filers can make the full contribution if your combined income is less than $193,000/year, and a limited contribution for a combined earnings up to $203,000.

Other Types of IRA Accounts

Ally Invest also supports these other IRA accounts:

  • Traditional IRA
    Your contributions are made with pre-tax dollars and are tax deductible. You'll have to pay regular income tax when you withdraw upon retirement.

  • Rollover IRA
    This allows you to rollover a 401(k) from your employer. It becomes a Traditional IRA when you roll it over.

  • SEP IRA
    This IRA account is for self-employed individuals and small business owners. Your contributions are tax deductible, but you'll be taxed at your current tax bracket when you withdraw at retirement. SEP IRAs have higher contribution limits than Traditional and Roth IRAs.

  • SIMPLE IRA
    This is an employer-sponsored IRA plan for small businesses with an employer match incentive built in. Contributions are pre-tax and tax deferred until you withdraw at retirement.

  • Coverdell Educational Savings Account (ESA)
    This was originally called an Education IRA. It allows you to save for a child's education. Contributions are not tax deductible and are limited to $2,000/year, but withdrawals are tax-free.

Bottom Line

Ally Invest is not as well-known as other popular IRA providers, such as Fidelity and Vanguard. But it's worth considering. Ally Invest has some of the lowest trade fees in the industry. And with no annual fee and no minimums, its Roth IRAs are a great place for anyone to start saving in a retirement fund.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

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