A Merrill Edge Roth IRA lets you contribute up to $7,000 per year (or $8,000 if you’re 50 or older) with $0 account minimum, $0 commissions on stocks and ETFs, and no annual fee. All qualified withdrawals in retirement are completely tax-free. For Bank of America customers, the added benefit is that Roth IRA assets count toward your Preferred Rewards tier — meaning your retirement savings can also boost your credit card rewards bonus.
2026 Roth IRA Contribution Limits
| Filing status | Income for full contribution | Phase-out range | Above limit |
|---|---|---|---|
| Single / Head of Household | Under $150,000 MAGI | $150,000–$165,000 | Backdoor Roth only |
| Married Filing Jointly | Under $236,000 MAGI | $236,000–$246,000 | Backdoor Roth only |
| Married Filing Separately | Under $10,000 MAGI | $0–$10,000 | Backdoor Roth only |
| Age | Annual contribution limit |
|---|---|
| Under 50 | $7,000 |
| 50 or older | $8,000 (includes $1,000 catch-up) |
These limits apply to all your IRAs combined — you cannot contribute $7,000 to a Merrill Edge Roth IRA and another $7,000 to a Traditional IRA in the same year. You can split contributions between account types as long as the total does not exceed the limit.
Why a Roth IRA Beats Traditional for Most Younger Investors
The core Roth IRA advantage: you pay tax on contributions now, and all future growth and qualified withdrawals are tax-free. This compounds dramatically over decades.
Worked example: Ashley, age 30, contributes $7,000/year to a Merrill Edge Roth IRA for 35 years. Assuming 7% average annual returns:
- Total contributions: $245,000
- Account value at age 65: approximately $1,050,000
- Tax owed on withdrawal at retirement: $0
With a Traditional IRA, the same $1,050,000 would be subject to ordinary income tax in retirement. At a 22% marginal rate, that’s $231,000 in taxes owed over time. The Roth IRA advantage is largest for investors who expect to be in a higher tax bracket in retirement than they are today.
Roth IRA vs. Traditional IRA at Merrill Edge
| Feature | Roth IRA | Traditional IRA |
|---|---|---|
| Tax on contributions | Paid now (after-tax dollars) | Deductible (pre-tax) |
| Tax on withdrawals | Tax-free | Taxed as ordinary income |
| Income limits to contribute | Yes ($150K–$165K single) | No (deductibility has limits) |
| Required Minimum Distributions | None during your lifetime | Required starting at age 73 |
| Early withdrawal of contributions | Allowed, penalty-free | Taxed + 10% penalty |
| Best for | Younger investors; those expecting higher future taxes | Those expecting lower taxes in retirement |
The Roth IRA 5-Year Rule
To withdraw Roth IRA earnings tax-free, two conditions must both be met:
- You must be at least 59½ years old
- The Roth IRA must have been open for at least 5 tax years
The 5-year clock starts January 1 of the first tax year for which you made a Roth contribution. If you open a Merrill Edge Roth IRA in November 2026, your 5-year clock started January 1, 2026 — meaning it completes on January 1, 2031.
Important: The 5-year rule applies to earnings only. You can withdraw your original contributions at any time, at any age, with no tax or penalty.
Backdoor Roth IRA at Merrill Edge
High earners above the income limit can still fund a Roth IRA using the backdoor strategy:
- Open a Traditional IRA at Merrill Edge (no income limits apply to contributions)
- Make a non-deductible contribution up to the annual limit ($7,000 / $8,000)
- Wait for the contribution to settle (a few days)
- Convert the Traditional IRA to a Roth IRA — call 877-653-4732 or request the conversion online at merrilledge.com
Tax owed: If you convert promptly before the contribution earns returns, the taxable amount is minimal (only on any small gain). If you have pre-existing Traditional IRA funds at Merrill Edge, the pro-rata rule may apply — consult a tax professional before proceeding.
What to Invest in a Merrill Edge Roth IRA
Because Roth IRA withdrawals are tax-free, the best investments are those with the highest expected long-term growth — so the most growth occurs in the tax-free wrapper.
Strong Roth IRA choices at Merrill Edge:
- Total US market ETF (e.g., VTI, ITOT) — broad diversification, low expense ratios, high long-term growth potential
- Growth ETFs (e.g., QQQ, VUG) — higher expected returns, ideal for a Roth’s tax-free environment
- REITs (e.g., VNQ) — generate high dividends normally taxed as ordinary income; in a Roth, dividends compound tax-free
- Small-cap or value ETFs — higher expected returns over long periods
Less ideal for Roth IRA:
- Municipal bonds (already tax-exempt; the Roth advantage is wasted)
- CDs or money market funds (low growth = low tax benefit)
Merrill Edge offers $0 commission ETF trading with access to BofA Global Research for stock analysis. Note: Merrill Edge does not offer fractional shares, so you must buy whole shares. For fractional share access inside a Roth IRA, Fidelity is the better choice.
Preferred Rewards and Your Roth IRA
Your Merrill Edge Roth IRA balance counts toward your combined Bank of America and Merrill balance for Preferred Rewards tier qualification.
Example: If you have $60,000 in Bank of America accounts and $45,000 in a Merrill Edge Roth IRA, your combined balance is $105,000 — qualifying you for Platinum Honors tier (75% credit card rewards bonus), even though the IRA is a retirement account you’re not spending.
This makes a Roth IRA at Merrill Edge uniquely valuable for Bank of America customers who are building their retirement savings and want to simultaneously maximize their banking rewards.
How to Open a Merrill Edge Roth IRA
- Go to merrilledge.com and select “Open an Account → Roth IRA”
- Enter your personal information and confirm your tax ID (Social Security number)
- Link a funding source (Bank of America account for instant transfer, or external bank via ACH)
- Fund the account — you can contribute up to $7,000 for 2026 (deadline: April 15, 2027)
- Place buy orders for your chosen investments
See the full Merrill Edge IRA guide for Traditional IRA details and rollover options, or the Merrill Edge review for a full platform assessment.
The content on Wealthvieu is for informational purposes only and should not be considered financial, tax, or investment advice. Consult a qualified professional before making financial decisions. Full disclaimer · Editorial policy