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USAA ROTH IRA Overview
USAA is primarily marketed to military members and their families, but they also offer investment and life insurance products to the general public. Among their investment options is a Roth IRA.
Opening a USAA ROTH IRA Account
USAA operates mostly online, which might be a drawback for those who prefer in-person service since they have only 17 locations across 11 states. However, their website is user-friendly, and it only takes three clicks to start the process of opening an IRA.
You can open a Roth IRA at USAA with as little as $50 if you set up a $50 or more automatic monthly contribution, depending on the fund. USAA funds and a select number of non-USAA mutual funds are available. You can also fund your IRA with a USAA Certificate of Deposit (CD) starting with a $250 deposit. USAA offers two annuity options within their IRA products: a Flexible Retirement Annuity with a $5,000 initial investment and a Guaranteed Savings Annuity requiring a $20,000 minimum.
You can fund the account from any bank or investment account, and you don’t need a USAA bank account. They also accept checks by mail. You can roll over existing 401(k) accounts, TSPs, or other employer-sponsored plans into your new USAA IRA.
There are no fees to open an account, but there are also no incentives for doing so.
Investment Options
With a USAA Roth IRA, you can invest in stocks, bonds, ETFs, mutual funds, and CDs. However, new accounts are initially limited to USAA-managed funds.
There are 43 USAA-managed funds available for IRA holders, including target retirement year, index, sector, growth, and income funds. The average expense ratio for these funds is high at 1.04%. While three mutual funds have recently received Lipper Awards, the average Morningstar Rating is 2.97, with one 5-star fund and five 1-star funds.
By default, you can only invest in USAA-managed mutual funds. If you want to purchase other funds, you must call their financial advisor team to set it up on an account-by-account basis.
User Interface
After logging into your USAA account, you'll see an account summary screen providing an overview of your account. The main navigation bar at the top offers links to various account services.
Investment Accounts. This section is the main page for your IRA and includes links to view your account summary, positions, activity, balances, order status, and account services. Account services include links for recurring transfers, automatic investment plans, and fund transfers.
Portfolio View. This page displays a pie chart of your investments with additional details. If you have other USAA investment accounts, this page will show those as well.
My Watchlist. This page lets you create a watchlist of stocks. It’s similar to what you’d find on sites like Google Finance or Yahoo Finance.
Investor Education. This section offers articles on topics like retirement, education savings, investing principles, taxes, and personal finance. Much of the content is from Morningstar, with some contributions from USAA.
Market Insights. This page includes links to market commentary from USAA and Morningstar, as well as news segments featuring USAA fund managers. The articles are not well formatted in some browsers.
News & Research. Similar to Google Finance or Yahoo Finance, this page features news headlines and market information. It also includes a feature to create another watchlist.
Trade. This button opens the trading window where you can place trades within your account. The process is straightforward, and USAA makes it easy to set up automatic investments during your initial trade. Managing or setting up new recurring transfers is done on a different screen, which might be confusing.
Mobile App
USAA offers a mobile app that includes support for IRAs, but its functionality is limited. Users can view an account summary, activity, balances, and pending orders, but they cannot place trades, manage automatic investments, or transfer funds out of the IRA. You can, however, transfer funds into the IRA through the app.
Pros
- Strong integration with other USAA products
- Easy to set up automatic investments during trading
- Excellent customer support
Cons
- Limited physical locations
- Initially restricted to USAA funds
- High expense ratios and underperformance of USAA funds
- Redundant and minimally useful website features
- Website design is not as good as other platforms
- Limited functionality in the mobile app
Recommendation
This product is best for existing USAA customers who want to keep all their accounts in one place and are content with leaving their money in USAA-managed funds. Other investors should consider looking elsewhere for a Roth IRA.
USAA ROTH IRA Review Summary
There isn’t much that stands out about the USAA Roth IRA. New customers are unlikely to find compelling reasons to choose this product. Even existing USAA customers might want to explore other options, as the available funds are expensive and often underperform. While the integration with other USAA products is convenient, most investors would be better served by looking at alternatives for their Roth IRA.
Updated on 7/2/2024.
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