Charles Schwab Roth IRA: How to Open One and What It Costs

A Schwab Roth IRA costs nothing to open, nothing to hold, and nothing to trade US stocks and ETFs in. On those terms it is indistinguishable from Fidelity. The differences are narrower than the marketing suggests, and they come down to two things: how you want to get help, and how small you want to invest.

Below: what it costs, the steps to open one, the Stock Slices restriction, and where Schwab is the better pick.

The short version

How to open a Schwab Roth IRA

Around fifteen minutes online, or in person at a branch if you prefer.

• 1. Choose the account type. On schwab.com, Open an Account, then Roth IRA. Do not pick the traditional IRA by accident — the two sit next to each other and the tax treatment is opposite.
• 2. Identity and employment details. Standard federal requirements.
• 3. Beneficiaries. Schwab prompts you during the application. Do it then; going back later is a separate form.
• 4. Link a bank. Instant verification for most institutions.
• 5. Contribute and tag the tax year. Contributions made between January and the April filing deadline can count toward either year, and Schwab asks which.
• 6. Invest the cash. It lands in a sweep and stays there until you place an order.

Stock Slices and the S&P 500 limit

Schwab's fractional share programme is called Stock Slices, and it works from $5. The restriction that matters: it only covers companies in the S&P 500. That is fine for the large-caps most beginners want and useless for anything smaller. Fidelity's fractional programme has no such list.

The thing Schwab has that the others do not

Schwab operates physical branches, and its phone support is consistently rated the strongest of the major discount brokers — something we looked at directly in Fidelity vs. Schwab vs. Vanguard on customer service. For a retirement account you intend to hold for forty years, and which your family may one day have to deal with, that is worth more than a small difference in expense ratios.

Where Schwab falls short

Its managed option, Intelligent Portfolios, requires a meaningful minimum and holds a mandatory cash allocation in every portfolio. Schwab earns on that cash, which is how the service funds its lack of an advisory fee. It is not hidden, but it is a real drag on returns in a long-horizon account, and it is the main reason to look elsewhere if you want the account managed. Compare with Schwab vs. Fidelity on fund selection.

The rules that apply everywhere

None of the following depends on your choice of provider. They are IRS rules and they are identical at Schwab and at every competitor.

• Annual contribution cap. The IRS sets one limit across all your IRAs combined, not one per account, and indexes it to inflation. The 2025 figure was $7,000, or $8,000 from age 50. Confirm the current year's number on the IRS page linked below before you max out.
• You need earned income. You cannot contribute more than you earned that year. Investment income and benefits do not count.
• Income phase-out. Above a modified adjusted gross income threshold your allowed contribution shrinks, then disappears. The thresholds move annually.
• Contributions come out freely. The money you put in can be withdrawn at any age, tax-free and penalty-free. This is unique to the Roth and makes it a far less scary first account than people assume.
• Earnings are stricter. To withdraw the growth tax-free you need to be 59½ and have held a Roth IRA for five years.
• The deadline is tax day. You can contribute for a tax year right up to the filing deadline the following April, which means two years' worth can go in during the same spring.

Our pillar guide, how to open a Roth IRA, covers the decision itself — Roth versus traditional, and whether you should be using one at all.

What to actually hold in it

Opening the account is not investing. Money transferred into an IRA sits in cash until you buy something, and a surprising number of accounts sit that way for years.

For most people the answer is a broad, low-cost index fund or ETF rather than individual stocks — see the three-fund portfolio for the standard construction, and ETF vs. mutual fund for which wrapper to use. If you would rather pick individual companies, the mechanics are the same as any brokerage account: how to buy Apple stock walks through an order ticket end to end.

Once a year, check the mix has not drifted. Rebalancing takes about twenty minutes.

How Schwab compares to the other four

The honest summary: for a straightforward Roth IRA the differences between Fidelity, Schwab, Chase and Ally are small enough that convenience should decide it. Webull is the outlier, and the reason is in the third column.

Frequently asked questions

Is there a minimum to open a Schwab Roth IRA?

No. There is no minimum to open and no ongoing account fee. Stock Slices let you invest from $5 into S&P 500 companies, so a small contribution need not sit in cash.

Does Schwab charge for a Roth IRA?

There is no account fee and no commission on online US stock and ETF trades. You pay fund expense ratios, transaction fees on mutual funds outside the no-transaction-fee list, and a fee if you transfer the account out.

Can I buy fractional shares in a Schwab IRA?

Yes, through Stock Slices, but only in companies that are part of the S&P 500. Fractional investing in smaller companies or in most ETFs is not supported.

Schwab or Fidelity for a Roth IRA?

Both are free, both have no minimum. Schwab wins on branches and phone support and on its no-transaction-fee mutual fund list. Fidelity wins on unrestricted fractional shares, zero-expense-ratio index funds and cash management. Neither is a mistake.

What happened to TD Ameritrade IRAs?

Schwab acquired TD Ameritrade and migrated its accounts onto the Schwab platform. Former TD Ameritrade IRA holders are now Schwab clients, and the thinkorswim trading platform was retained.

Can I hold both a Roth IRA and a traditional IRA at Schwab?

Yes, as many accounts as you like. The IRS contribution limit applies across all of them combined, though, not to each one separately.

Fees, minimums, promotional matches and IRS limits all change. Every figure here is checked against the primary sources listed below, but confirm the current numbers on the provider's own page before you open an account.