What to Expect From IRA Fees

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In America, there is currently more money in IRAs than in 401(k)s, and the trend to transfer from 401(k)s to IRA plans is growing still amongst baby boomers who are posed to retire, which means that the IRA asset trend will continue to increase over the next decade. Because 401(k)s have collective bargaining power due to their corporate scale, companies are often able to negotiate lower fees. IRAs, on the other hand, only have the bargaining power of an individual’s account, and people can often be charged higher fees from their brokers. 

IRA fees

What are IRA Fees?

Research has found that most people who have IRA’s do not understand the amount of fees they are paying; in fact, a recent study revealed that 46% of baby boomers were not even aware they were paying fees on their IRAs, let alone understood the amount of fees they were being charged. You can end up paying thousands, possibly even hundreds of thousands of dollars, over time if you are not aware of how your account is set up.

The IRA fees on your account depend on the size of your investment and the kinds of services that you are being provided. An IRA plan has three basic structures: it can hold a mutual fund, which is usually a no-fee investment. If you choose to buy funds through a broker, you may pay them either a one-time broker commission, or an ongoing percentage of the revenue. A third option for larger accounts is to have a customized portfolio, in which case you will be paying commission and custodial fees, and additional fees if you hire a manager for the account instead of managing it yourself.

It is important to understand that higher fees may or may not necessarily be an indication of better service for your account. If your investment returns are low but you are paying a high amount of fees, you are not receiving the best value for the services provided on your account. It is possible to negotiate lower fees on your IRA, but your leverage is highly dependent upon the size of your account, and the size of the service provider you are working with.

Roth IRA Fees

The Roth IRA is a retirement investment option that allows your money to grow tax-free. A customer pays income tax on the money that they deposit into the account, after which the money can grow over time from the investment without being taxed. When you withdraw the money, it is also tax-free. This type of account is also sometimes called a no-fee Roth IRA. The name is somewhat misleading, since, in reality, customers still do pay Roth IRA fees.

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There are three types of fees that the customer will probably be paying. The first is an account maintenance fee, which covers the cost of just having the account open with the provider. This is similar to the way banks might charge you annually for keeping a checking account open with them. In the same vein, it is an unnecessary fee that can sometimes be negotiated down or away, often depending on the size of your account. A second fee found on Roth IRAs is for the expense ratio on investments in your mutual fund. This fee is charged by the mutual fund company itself to cover its own operational expenses. Most mutual funds charge 1% of the total investment you have made or less. Thirdly, your IRA may provide the option of trading stocks within the account in addition to your mutual fund investment, in which case the brokerage firm will charge commission on the trades.

Gold IRA Rollover

Even though mutual funds are considered far more stable investments than stocks, there is a certain amount of fluctuation within them that can prevent your IRA from growing or even cause it to depreciate in value despite all the fees you are paying. One option you can consider to increase the stability of your retirement investment is to roll over a portion, or the entirety, of your IRA into gold.

IRAs are allowed to invest in any asset. This includes real estate, mutual funds, stocks, and precious metals. Gold has inherent value, and as a limited and collectible resource is guaranteed to increase in value over time, making it a very secure long-term investment option for retirement. If you choose to roll over to gold, you are purchasing an actual product, not a stock option, and there are fees associated with that purchase.

Gold Rollover IRA Fees

There are a variety of fees you may have to pay to purchase gold with your IRA. The first fee you pay is the markup from the vendor, who is selling you the gold. This is a one-time fee that varies depending on the vendor, the type of gold, and the quantity you are purchasing. A general rule of thumb is that you pay less of a markup as the size of the gold bar purchase increases. 

You may find yourself paying another one-time fee to set up your new IRA account. This goes towards the institution that is setting up your account.  A third fee you might have to pay is called a custodian fee. According to federal law, every IRA, including investments in gold, must have a custodian, which is the financial institution that protects your account. They usually charge an annual fee and possibly transaction fees. One final fee you might pay is a storage fee, for the physical storage of your gold by a guarded storage facility. 

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There are ways to avoid Gold Rollover IRA fees. You have the option of setting up a Checkbook IRA, which is a retirement account controlled by yourself. You can then choose to purchase Gold Eagles, and if you store them yourself, you will be avoiding the storage and custodial fees. Discuss your many options with your financial advisor to determine the best way to increase your assets.

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