Switching IRA Due To High Charges

Added April 11, 2006 by Ilyce R. Glink

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Summary: To be responsible for your personal finances and retirement savings, you should always evaluate charges to accounts. A low balance fee, especially if you're already paying a maintenance fee, may be unnecessary. If you are being hit with extra charges on your savings accounts, investigate switching to a different financial institution. You should be able to make the switch happen electronically, so there is no withdrawal on the account, and you won't be taxed or penalized by the IRS.

Q: My wife and I have traditional IRAs with a big financial company. My wife has only about $17,000 in her account.

The company has started charging us $5 a month for a "low balance" on her account. This is in addition to $60 a year in maintenance fees. What should we do? We are about 3 to 5 years from retirement.

A: I think charging a $60 per year fee for a "low balance" is ridiculous -- especially since you're already paying $60 a year for maintaining the account.

Call the company and ask them to remove the fee. If they won't, you should consider switching the IRA to another financial company that doesn't charge as much, like Fidelity or charles Schwab or Vanguard.

You should be able to make the switch happen electronically, so there is no withdrawal on the account, and you won't be taxed or penalized by the IRS.

Good luck, and thanks for writing.

Published: Apr 11, 2006

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