Our retirement investment advisors often field questions about individual retirement accounts, more commonly known as IRAs. We understand; while IRAs can be very effective planning tools, they can also be complex, offering a range of options from which to choose.
From selecting the right IRA provider for your needs to minimizing your tax bill and maximizing your returns, IRAs require decision-making and, at least once per year, re-evaluation. These tips will help you get the most our of your IRA.
Wealth Management Strategies: Exactly How Much does Your IRA Cost?
Few things in life are free, and your IRA is no exception. Find out how much the firm that holds your IRA charges for holding the account. Fees may depend on the size of your account or they may be a set rate. Often, fees range from $25 to $50 per year, a not-insignificant charge that adds up over time.
Ask for a clear detailing of transaction fees. If your IRA manager is buying and selling stocks, exchange traded funds (ETFs), or other investment products, you're likely racking up some transaction fees. If your IRA dabbles in mutual funds, these often carry transaction fees, as well.
Finally, determine how the investment professional that handles your account gets paid. Do they charge a flat fee, or are they paid on commission? If they're compensated by commission, your account may have high fees or sales charges built in.
Is My Investment Professional a Good Fit for My Needs?
Does your investment professional's investing philosophy and preferred methods mesh with your own? Aside from transaction costs and fees, consider factors such as other products offered. Does your investment professional offer other investment vehicles that you generally prefer? If so, look into consolidating your other accounts with this investment firm in order to take advantage of these products.
Choose an IRA custodian who adheres to financial strategies and philosophies that fit your own.
Ask Your Retirement Plan Advisor how Your IRA Fits With Your Overall Retirement Plan
Your IRA can offer a number of benefits to your overall retirement plan. For instance, if your employer offers matching payments through a 401k or similar plan, take full advantage of what's essentially "free money" by contributing the maximum.
In addition, if your employer's plan offers a range of low-cost investment products. The ability to make regular contributions directly through a salary deferral makes saving for retirement an easier -- and relatively painless -- process.
In addition, IRAs offer a number of benefits, including the ability to have a retirement plan when:
- You've already contributed the maximum to your 401k but still want to save for retirement
- Your employer doesn't offer a plan
- You are a non-working spouse, and your spouse makes enough to pay for the amount of your contribution
- You're moving to a new job and want to explore 401k rollover options
- You want to consolidate multiple 401k accounts into one
- You're self-employed
Remember: Your IRA is Part of Your Comprehensive Financial Plan
Keep in mind that your IRA is part of your overall financial strategy. Just as you work with a trusted wealth advisor to manage your other investments, a trusted retirement investment advisor can help you make the most out of your IRA.
Consider your IRA to be part of your portfolio, rather than a separate investment. This perspective will help you manage risk and keep you on track to meet your retirement savings goals.