Charles Schwab IRA Review

It’s pretty hard to find things to dislike about Charles Schwab. Believe me, I tried. I opened an account and specifically looked for things to complain about. No go (mostly). With some exceptions, Schwab likely will have exactly what you’re looking for, no matter who you are.

Other than one surprisingly onerous fee to watch for if you like mutual funds, and a relatively steep $5,000 minimum for the robo advisor (aka automatic investing) accounts, you’re probably going to be a happy camper if you open an IRA at Schwab. That’s especially true if you want the option to call someone for help. Schwab offers 24/7 customer service by phone, chat or email.

I’ve made no secret of the fact that I’m a big fan of Schwab competitor Vanguard and, in some respects, that broker's simple website appeals more to me than some of Schwab’s overly busy pages (looking at you, mutual fund research screens). But the robust customer service, the breadth of Schwab’s offerings and the low costs make Schwab hard to beat.

Charles Schwab IRA pros & cons

Retirement account types

I dare you to come up with a type of IRA that Schwab doesn’t offer. Go on. I’m waiting.

Exactly. Check out all of the “Ys” in the table below. Schwab even offers “custodial inherited IRAs.” While other brokers offer custodial IRAs and inherited IRAs, the combo is a rarity. One tiny beef: I’d like it if, when I’m logged into my account, I didn’t keep seeing “open an account” buttons. I have an account, into which I am logged, Schwab! Please take note of that fact.

Account minimum: There’s no account minimum for IRAs at Schwab. As with any broker, you may run into minimum investment requirements on some mutual funds, though Schwab’s own mutual funds generally have a bargain basement entry fee of $1. (It’s not really a fee; that’s just a turn of phrase. It’s your money that you invest in that thing.)

Customer service: Schwab gets extra bonus points for its commitment to customer service, offering 24/7 phone, chat and email access. And I like how, when you’re trying to choose an IRA account, for example, Schwab’s website prominently features a helpful “contact us if you have questions” — including a phone number.

Charles Schwab IRA fees

When you look at a list of Schwab’s IRA fees — check out our handy table below — the list of $0s is pleasing to the eye, isn’t it? Schwab really does do an excellent job keeping costs low for us IRA investors.

Mutual fund transaction fees: Of course, no broker is perfect. The biggest “whoa” fee at Schwab is the $74.95 transaction fee on some mutual funds. For example, if you really like Vanguard’s super-low-cost, highly diversified Total Stock Market index mutual fund (VTSAX) — and you know I do — you’ll pay a one-time $74.95 transaction fee to buy it through Schwab. That’s pricey!

But there are plenty of affordable alternatives at Schwab: For example, you could buy Vanguard’s also-super-low-cost, highly diversified Total Stock Market ETF (VTI), instead of the mutual fund, which Schwab will sell to you with a $0 transaction fee.

Or you could pick from the 8,000+ mutual funds Schwab offers with no transaction fee. Many of those funds are on Schwab’s OneSource list — all of the funds on that list have no loads and a $0 transaction fee, which is lovely to see. It warms the cockles of my heart (do people still say that?) that the OneSource list includes ultra-low-cost index funds such as Schwab’s S&P 500 index fund (SWPPX) and its Total Stock Market index fund (SWTSX).

Transfer-out fees: Schwab’s $50 IRA transfer-out fee, while not $0, is a better deal than at some competitors. Plus, Schwab only charges it if you completely empty the account — partial transfers are free. Compare that to SoFi’s $100 fee for full or partial transfers out. Sadly, Vanguard recently added its own $100 full transfer-out fee (though that doesn't apply to ACH or electronic bank transfers, so I guess that's something). So Schwab beats SoFi and Vanguard on transfer-out fees, but look out, here comes Fidelity with $0 for any transfers out, partial or full. Sorry, Schwab.

Selling-too-soon fees: Schwab, Fidelity and Vanguard all agree on at least one thing: We investors must pay for whip-fast mutual fund transactions. All three brokers charge a $49.95 fee for selling your mutual funds within 90 days of purchase (to be precise, Vanguard’s fee is $50). No free returns here. Buy and hold, people. Buy and hold. (Actually, all three brokers refrain from charging this fee on their respective proprietary funds, so I guess free returns are a thing, even with mutual funds.)

Self-directed investment options

Other than a small limitation on fractional shares (more below) and the inability to trade crypto, I’m hard pressed to come up with anything that Schwab is missing on the self-directed front. You want to trade something, you can probably trade it at Schwab.

Fractional shares: Schwab lets you buy fractional shares of any company in the S&P 500. That’s sufficient, right? (Don’t look at me — I’m all in on ETFs and mutual funds in my IRAs.) At Schwab, all you need is $5 to buy a piece of, say, Apple (AAPL), a full share of which would otherwise cost you more than $180 currently. Vanguard only lets you buy fractional shares of its own ETFs (all you need is $1 to do that). But Fidelity! Have I mentioned Fidelity? It lets you buy fractional shares of any U.S. stock or ETF for as little as $1. Slam dunk for Fidelity.

Crypto trading: While Schwab doesn’t let you trade crypto directly, you can buy into bitcoin ETFs at Schwab. Talking about crypto around IRAs makes me nervous, so, moving on…

Coaching: Want to get into active trading? Schwab will coach you. I’m serious. For free. (That said, please know that you absolutely do not need to be an active trader to be a successful retirement investor.)

Managed investment options

Schwab gives you two main choices for automated investing, aka robo advice. Both services will invest you in a basket of diversified ETFs, automatically rebalance your account, and provide tax-loss harvesting. What gets me extra excited (I’m a nerd, I know) is that both services come with Schwab’s Intelligent Income tool, which figures out how much you can safely withdraw from your account each month, an absolute necessity for people relying on their savings to fund decades of grocery bills, dog toys and a Wordle subscription.

Schwab Intelligent Portfolios: Schwab’s robo advisor has a relatively steep minimum investment of $5,000. For comparison’s sake: You can get into SoFi’s robo advisor for $1, while Vanguard’s requires a $3,000 minimum deposit. That said, Schwab charges no management fee — zero! — which... now I feel guilty for even mentioning the account minimum.

Over at Fidelity, the robo advisor Fidelity Go is available to anyone with up to $25,000 — there’s no barrier to entry at all — and it, too, doesn’t charge management fees. But after you top $25,000 in your Fidelity Go account, you’ll pay a 0.35% management fee, which is clearly higher than Schwab’s 0% and Vanguard’s 0.15%.

One important note about Schwab’s robo advisor service: The company has gotten some grief from critics for putting a bigger portion of customers’ money into cash, compared with other robo advisors. And that chunk of your change in cash isn’t going to be earning one of those 5% rates you might see advertised elsewhere right now; Schwab’s rate is closer to 0.5%. Schwab makes no secret of the fact that this is one way it makes money. Here’s a footnote on the topic:

Schwab Intelligent Portfolios Premium: If you’re willing to pay extra, or, I guess, something, then you can get unlimited access to financial advice from certified financial planners. But the barrier to entry rises with Schwab’s premium service: You’ll need $25,000 to join.

Once you come up with the $25,000, then a $300 upfront fee plus $30 per month gets you the automated investment portfolio, plus unlimited meetings with a CFP, a digital financial plan, and access to online software for help testing your retirement portfolio through various doomsday scenarios, as well as planning for a variety of life goals, including college savings.

Retirement planning tools

Retirement calculator: I like Schwab’s retirement calculator. I mean, it said I’m on track for retirement — what’s not to love? But seriously, I like that it has an option to add additional retirement income, and there are handy sliders to adjust your savings rate and expected retirement expenses. A strong user experience, IMHO.

Link accounts. Schwab offers an aggregation service so you can see all of your balances, at other providers, in one handy place. This is super helpful when you’re struck by that age-old question: Will I ever be able to retire? You can also add real estate that you own.

Build a bond ladder. I got kind of excited when I saw what I thought was a tool to build a bond ladder. I mean, that can be a great way to create income from savings — thus, possibly a useful tool for someone eyeing retirement — but when I clicked on the “Build your bond ladder” button, it took me to a tiny little box for entering a ticker symbol, and offered zero insights as to which symbol might be good for me to enter there. Not as helpful as I’d hoped. Still, Schwab does offer tons of useful content about picking the right bonds for your situation (along with much useful content about other investment products), so you can get your questions answered by looking around on the website.

Roth vs. traditional IRA calculator: I love that Schwab has a calculator for this question of “which IRA is best for me?” But the calculator’s execution could be better. One thing I didn’t like: It asks for a married couple’s modified adjusted gross income as two separate entries — one for each spouse — and that’s confusing. Generally, a married couple will file jointly, with one shared income listed as AGI on the tax return.

Doing an IRA rollover with Charles Schwab

Schwab is a leader among brokers in terms of customer service, so if you want help with your rollover, you could do a lot worse than opening your rollover IRA here. Schwab offers a handy three-step list for how to do a rollover online, but throughout the process, a phone number to call for help is prominently featured.

Bottom line

My take is that Schwab is ideal for someone who knows what they want to invest in and suspects they may want to expand into other products and services in the future. I mean, Schwab has everything. Sometimes, that can feel slightly overwhelming on the Schwab website (less so on the more streamlined mobile app). However, it’s also true that, thanks to robust customer service, someone who wants to open an IRA but isn’t sure where to start should find it satisfying to go with Schwab, given that help is just a phone call, chat or email away.

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