The fees you pay in an IRA are often even worse than 401(k) Fees


 

Wealth Killer # 2

While all the attention has been focused on the confiscatory fees you pay in a 401(k) plan, IRA fees have gotten ignored. Many people assume they’re very low. Hold on to your wallet, because a March 2013 Government Accounting Office (GAO) report blew the roof off that myth! (Pages 34-39 of the Report reveal the tawdry details.)

Have you ever left a job and rolled your 401(k) into an IRA? Millions of people do every year. Financial firms often encourage workers who are leaving a job to roll over their 401(k) assets into an IRA also managed by the firm.
hidden fees Undercover investigators hired by the GAO called  thirty of the largest 401(k) providers. Seven of them  incorrectly stated there were no fees to open or  maintain an IRA. And half of the ten largest firms  incorrectly advertised free IRAs on their websites.  The fee information was scattered in tiny print in    hard-to-find documents on the site.

 The study found that at one of the largest IRA providers, the annual advisory fee is 1.5% of assets for accounts with balances up to $500,000. As Representative George Miller noted when he released the report in Congress, “This comes as no surprise since IRAs often come with higher costs when compared to a 401(k).”

So how big of a deal is a 1.5% annual fee? According to the Department of Labor, it’s a very big deal. A fee of only 1% can slash the value of your savings by 28% over the next 35 years.

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