How do IRA custodians make money?
IRA holders are charged an annual fee for having an account with a custodian. A custodian generates revenue in a variety of ways, including: • Asset based fees. • Holding fees • Transactional fees • Special fees Asset based fees are a calculated percentage of the value of your IRA. As your IRA continues to increase in value, the custodian will charge you more – even if you never purchase an asset. Larger accounts are penalized under this system. Transactional fees apply when your IRA purchases an asset. There are fees assessed for wiring funds; fees for reviewing a purchase and/or sale; and fees for recording each document. The process repeats itself when you sell that asset. These fees can add up quickly especially for active investors. Holding fees are also assessed for assets that are held with a custodian, quarterly. This means that if your IRA purchased a piece of real estate, the custodian could assess a quarterly fee for just holding the deed on behalf of your IRA. Special fees
