What Roth IRA Fees Do I Owe?

How much will your Roth IRA fees be and how can you reduce them?

Mother and daughter calculate fees with a laptop and calculator

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Roth IRAs are one of the most popular ways to save for retirement. Contributions into a Roth account come from post-tax earnings, so no additional taxes occur during the investment period or when you withdraw money from the account during retirement. However, Roth IRA fees could reduce how much you’ll have in the future.

As with any investment account, it’s important to understand the many layers of fees. Annual account maintenance fees, early withdrawal penalties, trading commissions, and mutual fund expense ratios can eat away your returns. Let’s discuss what you may encounter with a Roth IRA and what to do about it.   

  • The government charges no direct fees for Roth IRAs.
  • Financial institutions will charge account maintenance and transactional fees.
  • Mutual funds and exchange-traded funds (ETFs) could charge sales loads and expense ratios
  • The best way to minimize fees with a Roth IRA is to read the fine print and compare your options.

The Advantages of a Roth IRA

Roth IRAs are the only retirement account where you don’t pay taxes when removing your earnings in retirement because the money you contribute has already been taxed. 

Like other qualified retirement accounts, such as 401(k)s and traditional IRAs, no taxes are due on Roth IRA investment earnings or gains while in the account. Anytime you receive dividends or sell a stock at a gain, you can turn around and reinvest those earnings into something new.

A Roth IRA is a big benefit if you’re a young person with a relatively low-paying job. For example, if you’re in the 22% tax bracket right now and expect to be in the 35% tax bracket when you retire, you can save a lot of money by paying the taxes on the money you contribute now and then watching your investments grow tax-free over time.  

Types of Roth IRA Fees

There are no direct Roth IRA fees from the government, but you will likely encounter the following expenses from the financial institutions holding your Roth account. 

Account Maintenance Fees

Some brokerages charge annual fees for IRA accounts, although there may be ways to get around those fees.

For example, Vanguard charges a $20 annual fee if you have less than $10,000 in a Roth IRA, although you can have the fee waived if you sign up for e-delivery service. All yearly fees can be waived at Vanguard if your account balance is over $50,000.

Some brokerages don’t charge any fees at all for self-directed or robo-investing Roth IRA accounts, while some robo-investing firms do charge fees, usually as a percentage. Most brokerages, like Fidelity and Schwab, will charge annual fees at a flat rate or a percentage if you use their investment advisors to advise or manage the money in the Roth IRA account.


Brokerages may charge additional associated fees, such as fees for monthly paper statements, wire transfers, or returned checks or electronic processing. Make sure you understand any fees so you can opt out or avoid incurring them accidentally. 

Transaction Fees

Transaction fees are often referred to as broker commissions. Commissions have gone through several evolutions over the years. Recently, many investing apps, such as Robinhood and even big brokerages like E-Trade, Schwab, and TD Ameritrade, have brought most commissions down to $0 per trade. 

Transaction fees may be $0 on many or most Roth IRA U.S. stocks, options, or ETFs. But you may still pay transaction fees on:

  • Options contract fees
  • Over-the-counter (OTC) equities
  • Futures
  • Foreign stocks and securities
  • Secondary trades of CDs, corporate and municipal bonds
  • Any broker-assisted trades

Expense Ratios 

For a mutual fund and exchange-traded fund (ETF) in your Roth IRA, an expense ratio is the annual fee you pay for fund management and administration. The average expense ratio in 2020 was 0.54%, according to Vanguard. In general, passively managed funds offer lower expense ratios than actively managed funds.

Like commissions, these fees have gone down over the years. Many ETFs now offer expense ratios below 0.50%, or $50 for every $10,000 invested. If you find a fund you like for your Roth IRA that charges more than 1% per year, keep looking—you’ll likely find a similar fund with lower fees.

Sales Loads

A mutual fund sales load is a one-time commission for certain mutual funds, charged by the fund company when you either buy or sell a mutual fund. Sales loads vary widely, but are generally capped at 8.5% or less, according to rules set by FINRA. Most brokerages offer no-load or load-waived mutual funds as an option for your Roth IRA. 

Watch Out for Early Withdrawal Penalties

You can withdraw your contributions (called the cost basis) to the Roth at any time, without penalty. 

On the other hand, investment earnings can only be withdrawn without taxes and penalties if they are qualified distributions. If you take non-qualified distributions of investment earnings from a Roth IRA, you will be charged a 10% additional tax penalty in addition to regular tax on the amount withdrawn.

For the Roth IRA distributions to qualify for penalty-free treatment, you have to be over 59½ and have had the account opened for at least five years or qualify under certain conditions, such as being totally and permanently disabled. 

Penalty taxes also might not be charged if using the Roth IRA distributions for situations such as:

  • First residence purchase, build, or rebuild of up to $10,000
  • Unreimbursed medical expenses more than 7.5% of adjusted gross income
  • An IRS levy 
  • Health insurance while you’re unemployed for more than 12 weeks 
  • Adoption or birth expenses of up to $5,000

How To Keep Your Roth IRA Fees Down

The best way to keep your Roth IRA fees down is to read the fine print. When you’re researching brokerages where you’ll keep the account, figure out their annual maintenance fees and transaction fees.


Look to invest in funds, stocks, and ETFs with no load, no fees, and a low annual expense ratio. 

Fees can kill your returns over time. For example, let’s say you roll over a 401(k) balance of $25,000 into a Roth IRA and then earn 7% returns per year for the next 30 years before you retire. Your $25,000 will turn into over $190,000. If you average 1% in fees over that 30-year period, your balance could drop to roughly $143,500—you’d lose about $46,500 for retirement due to fees of just 1% per year.

The Bottom Line

Fees often come with Roth IRA investments, but you can be smart about your brokerage and investment choices to minimize costs over time. The more you reduce fees, the better off you’ll be in retirement. 

Frequently Asked Questions (FAQs)

How are Roth IRA fees determined?

Roth IRA fees are determined by the brokerage and investments that you choose. Each financial institution has a fee structure, and different mutual funds and ETFs charge varying fees.

How do fees compare between a Roth IRA and a 401(k)?

Many 401(k) investment options could potentially have higher fees because you’re generally limited to select investments. Mutual funds are the most common, which come with set expense ratios and higher initial investment minimums.

Can you get a Roth IRA without fees?

You can certainly minimize fees to a great extent, and with more money in your account, the institution may be willing to waive certain maintenance fees. You may be able to invest in only U.S. stocks to pay lower or no fees, but that also means less portfolio diversification. Every advantage carries some sort of risk. 

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Vanguard. "Vanguard Annual Account Service Fees."

  2. E-Trade. “Brokerage Account.”

  3. Vanguard. "Expense Ratios: What They Are and How They Work."

  4. Schwab. "Mutual Fund Fees and Costs."

  5. Investor.gov. “Sales Charge or Load.”

  6. IRS. "Topic No. 557 Additional Tax on Early Distributions From Traditional and Roth IRAs."

  7. IRS. "Publication 590-B (2020), Distributions from Individual Retirement Arrangements (IRAs)."

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