A Roth individual retirement account (Roth IRA) can be a powerful vehicle when it comes to saving for retirement. Though the money that you put into a Roth IRA is taxed (unlike a traditional IRA), you get 澳洲幸运5官方开奖结果体彩网:tax-free withdrawals in retirement—even on your earnings.

Even the best Roth IRA accounts aren’t free, though. All of the major 澳洲幸运5官方开奖结果体彩网:providers charge fees on these accounts. 澳洲幸运5官方开奖结果体彩网:These fees come in various forms: account maintenance fees charged by your provider, transaction fees for trading via your Roth IRA, and—for most Roth IRAs—澳洲幸运5官方开奖结果体彩网:mutual fund expense ratios and sales loads.

In this article, we’ll take a look at ওthese fees and how they might affect your retirement savings.

How Much Does a Roth IRA Cost?

For many investors, a Roth IRA is a great way to save for retirement. Though you have to pay tax on your 澳洲幸运5官方开奖结果体彩网:contributions to your Roth IRA, you won’t pay any tax when you take this money out—the opposite arrangement to a 澳洲幸运5官方开奖结果体彩网:traditional IRA. If you think that you’re going to be in a 澳洲幸运5官方开奖结果体彩网:higher tax bracket in retirement than you are now, that’s a great deal. Even if you aren’t, you’ll still receive tax-free withdrawals from your Roth IRA. And since there are no 澳洲幸运5官方开奖结果体彩网:required m🌠inimum distributions (RMDs), if you don’t need the money, you can leave your Roth alone and pass it to 澳洲幸运5官方开奖结果体彩网:your beneficiaries.

There are some costs associated with having a Roth IRA, though, and these can eat into your retirement savings. We’ve covered these costs in our 澳洲幸运5官方开奖结果体彩网:guide to Roth IRA fees, but we’ll summarize them here. In general, you’ll come across three primary types of Roth IRA fe𒉰es:

• Account maintenance fees: Some Roth IRA providers charge a monthly or annual account maintenance fee (sometimes called a custodial fee). The fee—and the dollar amount that you’ll pay—should be disclosed in your account paperwork. If your provider charges an account maintenance fee, you might pay $25 to $50 per year. However, many of today’s banks, brokerages, investment firms, and even mutual funds no longer charge a fee. 
• Transaction fees and commissions: Many Roth IRA providers give you the option to 澳洲幸运5官方开奖结果体彩网:trade stocks and exchang♕e-traded funds (ETFs). However, each time that you buy or sell an investment, you might owe a transaction fee or commission. Transaction fees vary greatly—and depend on what you’re trading—but they typically range from $5 to $20 per trade. If you do a lot of trading through your Roth IRA, these can add up quickly.
• Mutual fund expense ratios: 澳洲幸运5官方开奖结果体彩网:Mutual funds are the most common asset held in a Roth IRA, and they come with costs of their own. Most mutual funds have expenses that represent the cost of operating the fund, and these can range from as low as 0.25% (usually for passive 澳洲幸运5官方开奖结果体彩网:index funds) to as high as 2% or more. The average expense ratio across all mutual funds is about 0.50%.
  

None of these fees will normally affect whether it is worthwhile for you to have a Roth IRA. However, they can make a significant difference to the value of your 澳洲幸运5官方开奖结果体彩网:portfolio when you retire. That’s why it’s important to minimize fees wherever you can.

Roth IRA Fees and Retirement

Even a small difference in fees can have a big impact on your balance over time. So it’s important to pay attention to these fees and minimize them whenever possible. This is particularly important with Roth IRAs (and similar retirement accounts) because you will normally hold these accounts for a long time. This means that the fees you pay will affect the 澳洲幸运5官方开奖结果体彩网:compound interest that you receive, and thus the u🦩ltimate value of your IRA.

There are many different types of Roth IRAs now available, and many ways of set🅠ting up the investments that they contain. This makes it difficult to estimate the overall effect of fees on the “average” Roth IRA. But one way to answer this question is to consider the extent to which fe✃es might erode your nest egg.

The U.S. 澳洲幸运5ღ官方开奖结果体彩网:Securities and Exchange Commission (SEC) has done some research on how fees can affect your investment portfolio. This research suggests that over the course of 20 years, fees of 0.5% can reduce the value of your portfolio by $10,000 compared to the same portfolio with fees of 0.25%. The difference is even starker for accounts that charge a 1% fee. In that case, the account owner would see a reduction of nearly $30,000 in value over the same period.

This is why with Roth IRAs, it really p🐈ays to look at the small print and shop around for the best deal.

Frequently Asked Questions (FAQs)

The Bottom Line

Roth IRAs can be a powerful tool for investing for retirement, but they aren’t free. It pays to shop around and look for providers that charge reasonable fees—including commissions. And keep in mind that many brokerages offer commission-free tradi👍ng on🌄 certain funds. If you plan to buy and sell frequently in your Roth IRA, that could be a huge perk.

No matter which IRA provider and investments you choose, keep an eye on the fees. If they’re eating away at your returns, it’s probably time to make some changes to your Roth IRA. If you’re not sure what to do, hiring a 澳洲幸运5官方开奖结果体彩网:financial advisor can help.