1

I have several Simple IRAs with several different companies a few of which are not being contributed to actively. I recently received the advice that "as a rule" having a single account is better. However, one of the accounts has a significant penalty (5%) for closing the account early.

Is the benefit of having a single statement worth a 5% hit?

Are there other benefits of having one account besides a having a single statement?

1

If the number is greater than zero, it is too high. That said, brokers charge a nominal fee for an outgoing transfer, usually $50-150.

Usually if you have some sort of ridiculous fee, that means that you've been suckered into some sort of insurance/annuity product in your IRA account.

If that's what is going on, that sucks, but you're going to read your contract carefully and fully understand the rules associated with transferring the account or ending the annuity. It may be worth paying the 5% penalty, as the fees associated with these accounts are usually ridiculous. If you were sold a bill of goods and didn't understand what you were investing in, you should complain loudly and often -- that often results in fee waivers.

  • Ok, this is a variable annuity as well as a simple IRA. Is that a bad thing? The fees seemed reasonable when I last looked at them though I don't have them in front of me... I am thinking I should still try and close the account. – plntxt Jun 1 '11 at 16:09
  • I believe there's a special place in he'll for those who would sell a VA to someone inside an IRA. I think the regulating authorities would call this an inappropriate investment. – JoeTaxpayer Jun 2 '11 at 1:13
  • How long ago did you purchase the annuity? The hook in a VA/IRA scenario is that they "guarantee" the value of your investment via grossly overpriced life insurance. I would call your State Insurance Department or Attorney General and ask for guidance -- because you got rooked. In New York, many teachers unions accepted kickbacks for pushing members into high cost insurance investments in union-sponsored 403b programs... they ended up settling. You should try to get relief before paying a fee. – duffbeer703 Jun 2 '11 at 3:45
  • I talked to a rep at MetLife. The annuity has a 12% surrender fee that decreases 1% per year and I am currently at 7%... Pretty exorbitant if you ask me. I am currently in a "squeaky wheel" phase, but I may just have to wait it out. My next step is to contact the agent directly and see if he can get the fee waived. I'll update this answer w/ a comment when I have some sort of resolution (whatever that may be). – plntxt Jun 2 '11 at 19:03
1

When you say "closing the account early," is it because of a CD inside? Or will they charge a 5% fee to close before normal retirement age? This is a crazy fee. $5000 on a $100K balance (for example.) What kind of company is this with? I've never heard of a fee so high. No, the benefits are more for your own organizing, not much else.

  • Maybe my math is incorrect, or that it is a flat fee but the number I was told was $504 on $9300 dollar account with the first 10% not subject to the fee. (so over 5%). Granted $500 isn't going to break the bank but it does seem high. I guess the fact that the account isn't being contributed to is the red flag more than anything. It may be worth it to move it in the long run in spite of the 500 bucks. MetLife FWIW. – plntxt Jun 1 '11 at 0:01
  • Normal accounts, whether bank or brokerage, don't have such a crazy fee. It sounds like you were put into an insurance product and this is a surrender fee. I would ask more questions, and when you make it clear you were sold a product you couldn't possibly understand they would be better off just giving you your money than to risk a call from the state attorney general's office. – JoeTaxpayer Jun 1 '11 at 0:25
  • I have heard of MetLife retirement accounts having crazy fees like this. Look closely at the paperwork, it may be possible to jump through a few hoops with the account for a couple of years so you can get your money out without penalty. – bstpierre Jun 1 '11 at 2:20

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.