High front load fees on IRA

[Lowexpectations]

Originally Posted by Basilide

Reading more, I can see why ETFs are attractive. Index funds have a high minimum investment. I feel a bit more confident in handling this.

It is pretty messed up that lower minimum investments tend to go with high front load fees. Bleeding low earners in a retirement plan seems like a nasty way to do business.

Etf's can be index funds too

[mysticaltyger]

Originally Posted by Basilide

Thank you, this starts me in a good direction!



The IRA was established by my employer whom contributes to the plan. I am not sure if I can change custodians and get the contributions. I brought these concerns to my employer and I was told to try to negotiate with my advisor. I am not seeing a huge advantage to an advisor that clearly doesn't have our interests in mind, especially when I have so little money in the account so far. I have no leverage to negotiate.

Considering how little experience I have, it is a bit frustrating, so I am trying to gather information about what expectations I should have. It was suggested to me to invest in index funds, as well.

Looking at the performance of the account, my percent rate of return is listed at -8.36% while the S&P 500 is listed at 10.32%. That seems... bad.

I would not contribute any more to the plan and open up an IRA on my own with Vanguard. None of Vanguard's funds charge too much.

[Petunia 100]

Originally Posted by Basilide

I have a simple IRA and currently all my mutual funds have front loaded fees of 5.75%. Is this a raw deal? It is not sitting well with me because I cannot see how my funds will ever make a decent return if every transaction has this high of a fee attached, with managment fees and annual fees from the broker. I know very little about investing, so some guidance would be appreciated!

Yes, it is a raw deal. Is your employer willing to establish a second plan elsewhere? Doing so will not impact the existing plan; individual employees will simply have to choose which plan they wish to participate in.

Your employer can open a plan at Vanguard for $0 with $0 on-going costs. Employees pay no loads and enjoy Vanguard's low expense ratios. Admiral shares are not available in Simple IRAs. There is an annual fee of $25 to each employee for every fund in their account. This fee is waived once an employee's total Vanguard account balance reaches 50k. An employee can choose to use just one fund to keep this annual fee to a minimum. Vanguard offers funds which are appropriate as an "only" fund.

[Petunia 100]

I think most of the replies here missed that this is a Simple IRA, which is an employer plan. If OP wants to receive the match, OP has to contribute to the employer plan.

OP, don't contribute beyond the match. Open your own IRA (traditional, Roth, or one of each) elsewhere. Vanguard is an excellent place. Fidelity and Schwab are as well. But DO get your full match.

Also, Simple IRAs allow you to roll your contributions out to your own IRA. Be sure your account is at least 2 years old before you do this. There is a penalty of 25% if you do not follow this rule. Rolling your money out will not save you from paying the load, but is a way to get your money into low-cost funds/etfs.

https://www.irs.gov/retirement-plans...faqs-rollovers