If having to choose between a non-retirement lower cost index fund and a managed higher cost IRA (both traditional and Roth), which is less impeded and likely to grow more long-term?

Put another way, would the tax benefits of an actively managed IRA outweigh the drag of the higher fees? I suppose it's a matter of determining values for all the variables and doing the math, but I don't quite get the overall tax implications of non-retirement accounts. Is there an easy way to compare these two options generally?

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    Your question seems to be comparing apples and oranges. An IRA is just an account. Inside that account you can buy an index fund, or a managed fund. You can also buy an index fund or a managed fund in a non-IRA account. The account type (IRA or not) and fund type (actively-managed or index) are orthogonal choices. Can you clarify what options you are trying to compare? Are you trying to compare an IRA with a non-IRA, or an index fund with an actively-managed fund, or both? – BrenBarn May 2 '15 at 19:24
  • Thank you BrenBarn. In this case I am deciding whether to allocate cash on hand towards my existing broker-managed IRA or to open a new non retirement low cost index fund account that would not provide the tax advantages of the IRA. My assumptions, I guess incorrectly, were that I do not have low(er) cost allocation options within my current advisor/broker managed IRA, and also that I cannot have more than one traditional IRA account (I currently have both a traditional and Roth IRAs with the brokerage company). Are my assumptions mistaken? Thanks for you help. – Aaron May 2 '15 at 20:01
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    You can have as many IRAs as you want. The contribution limits are global across all of them (i.e., your combined contributions to all IRAs cannot exceed the limits), but if you don't like the one you have you can just stop contributing and put your money in a different one. As for low-cost options in your current IRA, that will depend on where you set up that IRA. Different banks provide different options. It sounds like you might want to revise your question to be a bit more general, something like "I have such-and-such IRA, my goals are such-and-such, how can I do this?" – BrenBarn May 2 '15 at 20:12
  • You can transfer your IRA into a low-cost index fund. If this index fund is offered by the brokerage that is the custodian of your current IRA (e.g. Schwab offers a S&P 500 fund), simply instruct your broker to do so (but watch out for fees that the your brokerage might charge for making this transfer if the index fund is offered by someone else). In fact, if there is a fee for investing in an external fund, go to the index fund (not ETF), tell them that you want to establish an IRA with them by transferring funds from an existing IRA, _and tell them to go fetch the money)..... – Dilip Sarwate May 2 '15 at 23:01
  • .... Asking your brokerage to do this transfer from their end will lead to delays, foot-dragging, etc because your broker does not want to lose the account if possible. On the other hand, the new custodian of your IRA is eager to get their hands on the money and will expedite things as much as possible. – Dilip Sarwate May 2 '15 at 23:03

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