You can open an IRA at a bank, brokerage, or robo-advisor in under an hour

Opening an IRA means choosing a provider, filling out an account application, funding it, and selecting how your money is invested. Most providers let you do this online without leaving your house. The whole process typically takes 15 to 45 minutes, though some applications ask for additional documents that can add a few days.

The real decision is not the paperwork—it is picking the right provider for how you want to invest. A bank is straightforward if you want to keep your money in savings or CDs. A brokerage like Fidelity, Charles Schwab, or Vanguard gives you access to stocks and mutual funds. A robo-advisor like Betterment or Wealthfront builds a portfolio for you automatically based on your age and risk tolerance. Each charges different fees and offers different investment options, so the choice depends on whether you want to pick individual investments or have someone else do it.

Key Takeaways

  • You can open a Traditional IRA or Roth IRA at a bank, brokerage, or robo-advisor, and the choice of provider matters more than the type of account.
  • The application itself takes 15 to 45 minutes and requires your Social Security number, income information, and a funding method.
  • You must fund your account within the same calendar year you open it if you want that contribution to count toward that year's limit.
  • After opening, you choose how your money is invested—either by picking individual funds yourself or letting the provider do it automatically.

Step 1: Decide between a Traditional IRA and a Roth IRA

Before you pick a provider, decide which type of IRA makes sense for your situation. A Traditional IRA lets you deduct contributions from your taxes in the year you make them, but you pay taxes when you withdraw the money in retirement. A Roth IRA takes money after taxes now, but withdrawals in retirement are tax-free. The choice depends on whether you think your tax rate will be higher or lower in retirement, and whether you have earned income this year.

If you are unsure, a Roth IRA is often simpler for people starting out: you know exactly what you paid in taxes, and you do not have to worry about required withdrawals later. A Traditional IRA makes more sense if you earned a lot this year and want to lower your taxable income right now. You can open both types at the same provider, but your total contribution across all IRAs cannot exceed $7,000 per year (or $8,000 if you are 50 or older), so pick one or split the amount between them.

Step 2: Choose a provider based on how you want to invest

Your provider is where your account lives and where you make investment decisions. Banks like Chase, Bank of America, and local credit unions offer IRAs, but they typically limit you to savings accounts and CDs—good if you want no risk, but your money grows slowly. Brokerages like Fidelity, Charles Schwab, E-Trade, and Vanguard let you buy individual stocks, bonds, and mutual funds, giving you more control and usually lower fees. Robo-advisors like Betterment, Wealthfront, and Vanguard Personal Advisor Services build a diversified portfolio for you based on your age and goals, which works well if you do not want to pick investments yourself.

Compare fees before you decide. Many brokerages charge nothing to open an account or make trades, but they may charge annual account fees or fund expense ratios. Robo-advisors typically charge 0.25% to 0.50% of your account balance per year. Banks usually charge nothing but offer lower returns. If you are starting with a small amount—say, under $1,000—a robo-advisor or a low-cost brokerage like Fidelity or Charles Schwab is usually your best bet because they have low or no minimums.

Step 3: Complete the online application

Once you pick a provider, go to their website and look for "Open an IRA" or "New Account". You will answer questions about yourself, your income, your employment status, and your investment experience. Have your Social Security number, date of birth, and current address ready. The application will ask whether you want a Traditional or Roth IRA and may ask about your income to confirm you are within the limits for that year.

Some providers ask whether you have other retirement accounts or whether you are covered by a workplace retirement plan—this matters for tax deductions on a Traditional IRA, so answer honestly. The application usually takes 10 to 20 minutes. Once you submit it, the provider reviews it (usually instantly for online applications) and sends you a confirmation email with your account number and next steps.

Step 4: Fund your account

You cannot use your IRA until you put money in it. Most providers let you fund your account by linking a bank account and transferring money electronically, which usually takes one to three business days. Some also accept checks mailed to their address or wire transfers. A few let you fund by credit card, though that is less common.

The amount you contribute must not exceed $7,000 per year (or $8,000 if you are 50 or older), and you must have earned at least that much in income during the year. If you are opening the account in December, fund it before December 31 if you want that contribution to count toward this year's limit. If you miss the deadline, you can still fund it in January and it will count toward next year instead—just make sure you do not accidentally contribute to both years.

Step 5: Choose your investments

After your money arrives in the account, you need to tell the provider how to invest it. If you chose a robo-advisor, this step is automatic—you answer a few questions about your age and risk tolerance, and the platform builds a portfolio for you. If you chose a brokerage or bank, you pick individual funds or stocks yourself. Most beginners start with a target-date fund, which automatically adjusts its mix of stocks and bonds as you get closer to retirement—for example, a "2055 Target Date Fund" if you plan to retire around 2055.

If you do not choose an investment within a certain time (usually 30 to 60 days), some providers move your money into a default fund or a money market account. Check your provider's rules so you do not accidentally leave your money sitting in cash earning nothing. Once you pick your investments, your account is fully set up and your money starts growing.

What happens after you open your IRA

After your account is open and funded, you do not have to do much. Your investments grow tax-free (or tax-deferred, depending on the type). You can add more money each year up to the annual limit, and you can change your investments whenever you want without paying taxes on the gains. Most people check their account a few times a year to make sure it is still aligned with their goals, but you do not need to trade constantly.

Keep track of your contributions so you know how much you have put in over the years—this matters when you withdraw money in retirement, because contributions come out tax-free but earnings do not (in a Traditional IRA). Your provider sends you a statement each year showing your contributions and account balance. Save these statements or take screenshots, because you may need them for your taxes or if you ever need to prove how much you contributed.

Frequently Asked Questions

Can I open an IRA if I do not have a job?

No, you must have earned income in the year you contribute. Earned income means wages from a job, self-employment income, or taxable alimony. Investment income, Social Security, or unemployment benefits do not count. If you are married and your spouse works, you may be able to open a spousal IRA in your name using their income—ask your provider about this option.

How long does it take to open an IRA?

The application itself takes 15 to 45 minutes. Your provider usually approves it instantly or within one business day. Funding takes one to three business days if you transfer from a bank account. You can start investing as soon as the money arrives, so the whole process is usually done within a week.

What if I already have an IRA at another bank?

You can open a second IRA at a different provider, but your total contributions across all IRAs cannot exceed the annual limit. You can also roll over money from one IRA to another without penalty—this is called a rollover. Contact your old provider for their rollover form, and your new provider can usually walk you through the process.

Do I have to invest in stocks, or can I keep my money in savings?

It depends on your provider. Banks offer savings accounts and CDs. Brokerages offer stocks, bonds, and funds, but many also have money market accounts or sweep accounts that work like savings. Robo-advisors typically invest in a mix of stocks and bonds. You can keep your IRA in cash if you want, but your money will grow very slowly compared to investing in funds or stocks.

What if I do not have $7,000 to contribute right now?

You can open an IRA with as little as $0 at many providers and add money throughout the year. Some brokerages and robo-advisors have no minimum to open. You can contribute $100 one month and $200 another month—just make sure your total does not exceed $7,000 for the year. You can also open the account now and fund it later, as long as you fund it by December 31 if you want it to count toward this year.