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What Are Common IRA Fees And No-Fee Iras?

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An IRA, or an individual retirement account, provides a mechanism for retirement savings with certain tax advantages. There are a few different types of IRA accounts, and the benefits of each vary slightly. The types of fees, such as administrative fees, associated with an account are also different across accounts, investment firms and investment types. Always review account disclosures and all associated paperwork for an IRA to ensure all potential costs are understood.

IRA types and taxes

A traditional IRA allows for tax contributions to be deducted from taxable income up to a set limit defined by the Internal Revenue Service annually. This limit includes contributions across multiple IRA types. After money is deposited in any IRA type, it can grow tax-free provided it stays in the account until retirement, or age 59.5, according to the IRS. When money is withdrawn in retirement, it is taxed. The premise behind the tax deferral is that many retirees are in a lower tax bracket than they were when actively employed.

Roth IRAs are contributed to with after-tax dollars, so when funds are removed in retirement, they are not taxed. Many can still grow tax-free, but there are annual contribution limits. In a rollover IRA, funds from other, qualified retirement accounts are moved into a traditional IRA.

Fees for IRAs

Outside of the cost of taxation, other primary IRA costs are fees, and while some IRAs are no fees for life IRAs, many have administrative fees billed at a flat rate annually or as a percentage charge. Retirement accounts can have an annual fee and charge commission fees or transaction fees when buying and selling stocks or assets within the account, according to CNBC Select.

No fees for life IRA

Because stock and bond transactions generally have transaction fees passed on to the consumer, no fees for life IRA options predominantly promote investment in precious metals, such as gold. For this investment option, the precious metals sit and gain or lose value over a period of years. With limited transactions, fee options are limited, but there are generally storage costs for the metals themselves. 

According to a Money review of Gold IRA Companies, some defer storage fees for a period of years. It is also possible to pay upfront for a large period of storage time to avoid annual fees. When researching any no-fee IRA option, it's important to learn about any upfront costs or charges that kick in after a period of time. While limiting traditional fees associated with IRAs may provide savings, initial costs or transfer costs if the account is closed or rolled over could meet or exceed annual fees.


22 June 2023