IRA Custodian Fees: Are You Overpaying?

IRA custodians are a necessary part of having an individual retirement account. You are required by law to entrust your retirement funds to a custodian in order to benefit from the tax advantages that come with an IRA. However, the fees that some of these custodians charge can really burden investors.

Custodian Fees

A custodian is typically a financial brokerage that offers IRAs and other financial services. In return for administration and other services, custodians will sometimes charge a fee. Most of the time, the fee is a small, nominal amount such as $50 per year. However, some custodians charge a percentage of the total assets that are in the account on a yearly basis.

Avoiding the Fees

Many years ago, many of the administrative tasks associated with being a custodian had to be done by hand. This was a good justification for charging an administrative fee. However, in today's high-tech world, most of the services provided by a custodian are done electronically. Therefore, you should try to avoid these fees at all costs.

If your custodian is charging fees, you might want to consider shopping around for another IRA provider. If you find a better deal, ask your current custodian if they will eliminate their custodian fees. Otherwise, you might want to roll over your assets to another custodian.