Capital One roth ira review 3-star brokerage rating

Capital One IRA Review and Rates in 2023

Capital One IRA Has Been Discontinued

E*Trade acquired Capital One Investing service, fully integrated it and discontinued the brand. As an alternative, please read detailed Charles Schwab Review.

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Capital One IRA Commissions

Stocks and ETFs$6.95
Stocks and ETFs phone trades$19.95
Options$6.95 + $0.75 per contract
Mutual funds $19.95
Automatic Investments (stocks, mutual funds and ETFs) $3.95

Investments stocks, options, mutual funds, ETFs
Capital One Investing minimum deposit to open account $0 for cash account, $2,000 for margin account

Capital One IRA Fees

  • IRA setup fee: $0
  • Annual IRA fee: $0
  • IRA termination fee: $0
  • Account maintenance fee: $0
  • Account inactivity fee: $0
  • Outbound full account transfer: $75
  • Outbound partial account transfer: $15 per security ($75 maximum)

Capital One IRA IRA vs Brokers IRA Overview

Opening a Capital One IRA IRA is a great idea if you want to build a nest egg for retirement. But is it better to open a retirement account with a bank or a broker? This article will look at the pros and cons of having an IRA at a bank or at E*Trade, Fidelity, or TD Ameritrade.

Capital One IRA IRAs

If a bank has FDIC insurance, all IRAs available with the bank will also be FDIC insured. The IRA does not qualify for separate or additional insurance. Rather, the IRAs balance is simply added to your maximum protection of $250,000. Nevertheless, having a retirement account that is FDIC insured is certainly appealing to many investors. As we shall see, an IRA at a broker is not FDIC insured.

There are other benefits of having a bank IRA. For example, the assets of an IRA at a bank are usually deposited in a savings account or a certificate of deposit. Since these accounts are fixed-income products, the principle is guaranteed not to go down. Interest payments are also assured, which makes the IRA very safe. Retirement savers who are concerned about the volatility of variable investments, which a broker's IRA is usually invested in, would benefit from the safety and stability of a bank IRA.

One of the downsides of the bank version is that they tend to offer lower returns. For example, an IRA at Ally Bank invested in a savings account currently earns just 1.00%. This rate is variable, but has been fairly consistent over the last several years. A 5-year IRA CD at Ally currently has a 1.7% yield for deposits of at least $5,000. Bank of America offers a Money Market IRA, although it pays only 0.03%. Investors who need a higher return would probably be better off with a broker's IRA, where they can invest in higher-yielding assets.

Different bank IRAs can be structured either as a Roth or Traditional account. The Roth version is ideal for retirement savers who expect to be in a higher tax bracket after work, while the Traditional account is better for workers who plan to be in a lower bracket during retirement. Citibank also offers a Rollover IRA, which allows you to transfer retirement assets from an old employer to a new IRA with the bank.

Brokerage IRA

A broker is not a bank, so it is not FDIC insured. There is however SIPC insurance, which protects brokerage accounts up to $500,000. Of this amount, a maximum of $250,000 in cash is insured. SIPC is not a government institution like the FDIC. Rather, it is Congressionally mandated and funded by the brokers themselves.

An IRA at a broker can invest in the same securities that a non-retirement account can. Typically, these assets are stocks, bonds, ETFs, and mutual funds. Precious metals, such as gold and silver, can also be held in an IRA. Let's take a look at some IRA offerings from four specific brokers.

E*Trade IRA

Several retirement accounts are available at E*Trade. These include Roth, Traditional, Minor, Complete, Rollover, Beneficiary, SIMPLE, and SEP accounts. Withdrawals from these IRAs are assessed a $25 fee if they are made before age 59½. E*Trade retirement specialists can be reached over the phone, and there is a lot of educational material on the broker's website dedicated to retirement issues. The broker's mutual fund screener returns over 7,500 mutual funds that are open to new investors.

Fidelity IRA

Fidelity offers Roth, Traditional, Rollover, SIMPLE, Roth, Inherited, and SEP IRA accounts. They carry no special fees. The firms's clients have access to over 11,000 mutual funds, some of which are target-date funds. The Fidelity site has plenty of material on it dedicated to retirement topics.

Charles Schwab IRA

Several IRA choices can be found at Charles Schwab, including Traditional, Roth, SEP, SIMPLE, Rollover, and Minor accounts. The broker does not charge any IRA fees. Its mutual fund screener returns 11,900 products that are open to new investors. Calculators, such as an IRA distribution tool, are on the broker's website.

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Capital One IRA Review Final Thoughts

While banks come with FDIC insurance, IRA choices are rather limited and typically come with low rates. Investors who have longer time horizons with higher risk tolerance will benefit from an IRA at a brokerage firm, which offers trading in securities. TD Ameritrade has the most funds, while E*Trade has the most IRA choices. And equity traders would do well at Webull with $0 trades.