What is a typical IRA annual fee?

Question

I'm about to rollover my 401k to an IRA. It's worth about $19,000.

The investment firm charges an Annual Account Fee of:

"1% of Market Value plus $25/year administrative fee"

In addition, I will be charged:

"investment management fees and expenses by the mutual funds in which the IRA account assets are invested."

Does that mean I'd be paying $190+$25 per year (and more later as the account grows, obviously), and additional fees for the mutual funds?

That seems very high to me. Is this reasonable, or just a rip-off?

What are typical IRA annual fees?

Answer 1

I pay 0 fees for mine. I have a Scottrade IRA, 0 fees etc and then by my own funds.

Answer 2

At a full-service national brokerage firm, you'll typically pay $40 for an IRA's custodial fee.  That's the fee for the IRA.

One or two major firms charge a percentage, and typically it's stated as "1% of market value up to $100" or something like that.  

Investment fees are separate.  And make no mistake, ALL mutual funds, including those called "no-load" and including Vanguard--charge fees and expenses.  ALL.

And, by the way, there's nothing illegal or immoral about working with a financial advisor who's paid on commission.  You're paying for advice and expertise, much the same way you go to an auto mechanic (although the advisor might take exception to that analogy!).

With a bank teller, typically you're told there is no IRA fee.  However, your only investment choice is a CD and typically the "IRA CD" pays a lower percentage than a "regular CD."  So is there a fee?  Of course, it's just built in.

Since the material you've quoted specifically states "...mutual funds in which the IRA account assets are invested..." it sounds like you're working directly with a mutual fund, or with a bank, insurance, or small storefront financial advisor who has only a Series 6 license as opposed to a Series 7.  Otherwise you typically would have choices as to investments (i.e., unit investment trusts, annuities, stocks, ETFs, etc.).

To answer your question as to whether this is reasonable--that's a subjective reaction.  It's reasonable if you think it is.  I think it isn't.  You might consider making some more calls.

Good luck.

Answer 3

IRA fee at a broker should not be a percent.  Flat fee, max $50.

Banks don't charge fees, but the offerings are limited to bank accounts.

Answer 4

IRA Fees for me at Schwab:   $0

IRA Fees for me at ThinkOrSwim:   $0

IRA Fees for me at Dodge & Cox:  $30 a year

As a "newbie" I'd suggest going to;

Schwab   (lots of service, lots of mutual Funds)

Fidelity    (good service, lots of Mutual Funds)

T. Rowe Price  (great "target Funds", low expneses)

Dodge & Cox (not really set up for newbies.... but wonderful funds with some of the lowest expenses in the country (internal fees of about .60% vs. average Mutual Funds of 1.50% and more).

BTW: The fees you quoted;

"1% of Market Value plus $25/year administrative fee"

does not include the internal fees for the mutual funds or sales charges (if any).

Read:

Mutual Funds For Dummy's

One last thought;

The worst two places for any investment (IRA's or not) are Banks and Insurance companies.  Stay Clear.