Fee Free IRAs

Posted by Mrs Money on December 8th, 2011

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Mr. Money and I both have Roth IRAs with a brokerage account at the bank I currently work at.  Since they are in mutual funds, there is an annual fee for having the accounts.  Every year it’s been $15 since I’m an employee, and he’s my spouse.  Imagine my surprise when this year I received the bills and they were each $40! I almost had a heart attack.  I didn’t mind paying $15 a year, but $40 a year is way too much because the balances we have in those accounts doesn’t make up for it.  My account has around $400 (I put $500 in about 7 years ago and left it at that).  Mr. Money’s has more, which is good because he’s older.

When I went to talk to the broker about it, he told me that the fee had gone up and they would try to get it waived for me.  However, if I wanted to close the accounts, there is a $75 fee.  Nice.  So not only would I be out the annual fee if they can’t get it waived, I’m also out $75 each account.  Really?  I am exploring these options:

-Finding a new brokerage company that doesn’t charge annual fees or other stupid fees.  I’m fine with paying trading fees, since I don’t think there’s really any way around those at any company.  I just can’t stand the idea of paying $40 a year just for them to hold my account.

-Opening up a Roth IRA for each of us with ING.  With ING, they have an IRA savings account that has no minimum balance and no fees.  I really like that idea.  I’ve thought about starting one of those for each of us, and then contributing what we can each month.  When the balance builds up to say $10,000 (which will probably take quite awhile!), then I could always look into transferring it into a brokerage account.

-I’m thinking about just closing out my account totally and just using the money to buy baby things.  Of course, I’d have to claim this as income, which would be a pain, but I wouldn’t have to pay that much in taxes since the balance is so small.

I am waiting to see what happens with the annual fee.  If they can get it waived, then I’ll probably just leave the accounts as they are.  However, I’m worried that once I terminate my employment that they will realize that and remove the waiver and I’ll be right back in the same situation.  I think it would be easiest to just close out the accounts and move them to ING because of the no minimums and no fees, but I’m worried about lost opportunity in the mutual funds.  Of course, if my account has been in mutual funds for 7 years, and I’m $100 less than what I put in, it’s really not doing that well any way!

Planning for retirement can be such a headache.  I’m glad we’re getting it done now, but I’m hoping there’s an easy solution so I don’t have to do too much work after we get it squared away!

Do you have an IRA?  What is your favorite place for a fee free IRA?

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11 Responses to “Fee Free IRAs”


  1. I set up a fund with Vanguard. There is an annual fee (maybe $20?) for the fund I got (STAR fund), but it is waived if you sign up for electronic mailings instead of paper. I am not sure what the policy is for their other funds, but it is worth looking into!

    [Reply]

    Mrs Money Reply:

    ListfulWistful- That’s great! Thanks so much for the recommendation!

    [Reply]

  2. Catherine says:

    I have a Roth IRA with Vanguard and really like them. I think most of their funds have a $3,000 minimum, though. Not sure on that.

    I would highly recommend ING, though. We started checking/savings accounts with them a year ago and I would never go back. It’s so simple to check balances, move money around, etc.

    [Reply]

    Mrs Money Reply:

    Catherine- Thanks for the recommendation! I think I’ll probably start with ING, and when we have enough money saved, I’ll transfer it to Vanguard!

    [Reply]

  3. Kacie says:

    Is there any fee for you to transfer the funds to ING? I think the money needs to go somewhere else, because your money will be GONE in a few years with their fees. $75/year on a $400 balance? Yeah. Gone in 5 years.

    Would you for sure have to pay taxes? I thought you only had to pay taxes on the gain. Since this is a Roth, you already paid taxes on the front end. They can’t tax a loss…I think. The tax situation is worth researching and narrowing down further so you know the exact dollar amount. I’m no CPA, sorry!

    You don’t need to wait for a full $10k to transfer to a brokerage. If it takes you awhile, that’s missing out quite a bit on the market in a savings account and that could be costly later. You can open an account at Vanguard with $3k.

    My armchair advice is to transfer the accounts to the ING Roth IRA. Be sure it stays in a Roth. Then, when the account hits $3k, scoot them over to Vanguard. Maybe you can put Mr. Money’s money into Vanguard already. Yours can hang out in ING while you save up.

    [Reply]

    Mrs Money Reply:

    Kacie- If we transfer the funds to ING, we’ll have to pay the $75 each close fee. The annual fee is $40.

    I should definitely look into the tax penalty. If I roll it over from the Roth to another Roth, then I don’t think I would be penalized at all.

    I think you’ve got the right idea- I think I am going to start it with ING and then transfer it to Vanguard. Do you like them?

    [Reply]

  4. krantcents says:

    I have a few IRA accounts at Schwab, Fidelity and Vanguard. When you maintain a sizable account, they waive the fees.

    [Reply]

    Mrs Money Reply:

    krantcents- Looks like I need to start saving more money for retirement ;) Thanks so much for your help!

    [Reply]

  5. Emily says:

    We have IRAs with T. Rowe Price, and as far as I know they are fee-free, probably b/c they are fairly large.

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  6. Congrats on the baby! I have traveled at 20 weeks pregnant twice. It isn’t a bad time to go. You aren’t too big and you are no longer sick. I love being a SAHM. I hope you enjoy it too!

    [Reply]


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