What Are Typical Roth IRA Maintenance Fees?

by Brian Nelson ; Updated July 27, 2017

A Roth IRA account is a popular tax-advantaged retirement savings account. Contributions made into the Roth IRA are not tax deductible. However, all interest and gains are tax-deferred. Funds drawn after the account holder reaches age 59 1/2 are tax-free. Roth IRAs must be set up in a separate account by a financial custodian. IRA custodians may charge certain feeds on these accounts that can add up to a big drag on your retirement savings.

Significance

Roth IRAs provide a way to save money without paying taxes on gains and interest for a person's retirement. In some cases, an account holder may have a Roth IRA for 30 years or more. That means that annual maintenance fees on Roth IRAs can add up to big money. Someone who starts an IRA at age 20 and pays a $30 annual maintenance fee will have paid almost $1,200 in fees by the time they can withdraw the money without penalty at age 59 1/2. Add up how much compound interest those dollars could have earned during the life of the account, and the number is much higher.

No-Fee Roth IRAs

Many discount brokerages and even some banks and full-service brokers offer no-fee Roth IRA accounts. For example, Fidelity and Charles Schwab offer IRA accounts with no maintenance fees, as does Merrill Lynch and Bank of America.

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Annual Maintenance Fees

Roth IRAs with no annual maintenance fees are pretty common. For those companies that do charge a fee, typical Roth IRA custodial fees range from $10 to $50 per year.

Considerations

Many financial institutions that do charge an annual IRA maintenance fee offer to waive that charge if certain conditions are met. The most common condition for waiving a Roth IRA maintenance fee is to have a certain minimum balance in the account, or have a certain minimum amount of assets on deposit with the firm. For example, Vanguard typically has a $20 annual IRA fee, but that fee is waived if the customer has at least $10,000 invested.

Warning

Unfortunately, the Roth IRA maintenance fee is not the only typical charge levied on accounts. One common IRA fee is an account closing fee. Customers are charged this fee if they close their IRA account or transfer it to another firm. For example, U.S. Bank charges customers $30 if they close their IRA account or transfer it to another firm.

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