IRA Cost

How Much Does an IRA Cost?

Low: No Fees

Medium: $20-$50 a year

High: $200+ a year

Called an Individual Retirement Arrangement, an Individual Retirement Account or an Individual Retirement Annuity, an IRA is a special government-defined and regulated account with tax advantages to help save for retirement.

Typical costs:

IRAs are legally allowed to charge annual maintenance fees; many are $30-$50, others are as low as $20 or as high as $200 or more. The annual fee may be waived or larger accounts, and some IRAs are set up with no annual maintenance fees.
Each time you buy or sell stocks, mutual funds or other investments in your IRA account, there can be either a commission charge or a transaction fee, which runs $7-$15 for discount brokers or $20-$100 or more at other institutions.
The government imposes a 10 percent penalty for withdrawing IRA funds before age 59-1/2 unless the owner is permanently disabled or dead, or the money has been in the IRA for at least five years and is used to pay for non-reimbursed medical expenses, a first-time home purchase, higher education, to pay back taxes to the IRS, or to cover medical insurance premiums for the unemployed.

What should be included:

IRAs are set up through a bank, savings and loan, credit union, mutual fund or brokerage. The money can be invested in mutual funds, stocks, bonds, CDs and annuities. Some IRAs require a minimum amount to open an account; others have no minimum.
A traditional IRA allows you to save money without paying taxes until you take it out of the account while with a Roth Ira lets you pay the income tax now and withdraw the money tax-free during retirement. Both types of IRAs have eligibility requirements and other restrictions; AARP.org gives a side-by-side comparison.
The Ohio State University Extension gives a detailed overview of how IRAs work, with definitions of common terms.
The IRS lists instructions for setting up a Simple IRA as a retirement plan for the employees of a small business.

Additional costs:

Some IRAs have a set-up fee of $25-$150 or more, and a termination fee of $50-75. They might charge $25-$75 an hour for doing research, or $2-$3 a page for making copies. Read the fine print, and ask specific questions.

Shopping for an ira:

Review the fee schedule before setting up an IRA account.
The Motley Fool provides a comparison chart of the products and fees offered by TD Ameritrade, ShareBuilder and E*Trade Financial.
Other leading IRA brokers are Charles Schwab and Fidelity.
Check the IRA terms at your current bank, credit union or savings and loan. Consider and compare a number of different sources for your IRA.

Article updated November 2006

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What People Are Paying - Recent Comments

Avoid Smith Barney

Amount: $30,000.00

Posted by: Investor Tom in Dayton, OH.	Posted: May 7th, 2009 05:05PM
Company: Citi Smith Barney	Type of Fees: Yearly, Termination

Avoid Smith Barney IRA's. Their fees just went up to $75 per year, plus when I closed my account, they charged the $75 fee plus another $75 for "Termination Fee". These guys are really pirates.