An IRA rollover can involve either moving money from a workplace retirement plan like a 401(k) or 403(b) to an IRA or switching money from one IRA provider to another. Regardless of the specific type of rollover you're making, there's no IRS requirement that IRA providers charge you fees. However, some financial institutions do take the opportunity to impose fees on customers, either when they're bringing money into a new IRA or taking money out of their old IRA. There are several different types of fees, so be sure to watch out for any and all charges that you might have to pay.

Transfer fees

Many brokers try to charge money if you transfer stock or other securities from your account with them to another broker's account. In some cases, you'll pay a flat fee to make the transfer. In others, the fee will depend on how many different stocks you own.

You always have the right to liquidate your assets and just transfer cash rather than transferring securities in kind. In fact, with some types of rollovers, such as moves from 401(k) accounts to IRAs, liquidation is the norm. There's no tax impact from the liquidation because the retirement account is either tax-deferred or tax-free. However, you have to compare the costs of liquidating assets -- which can include commissions, deferred sales charges, and other liquidation fees -- against whatever the asset transfer costs are. Whichever is cheaper is typically the smarter move.

Also, be aware that some brokers offer fee reimbursements when you transfer an IRA into an account with them. So if your old financial company will charge you a fee, see if your business is important enough to your new financial provider for it to pick up the tab.

Retirement jar with clock.

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Wire fees

If you elect to move your money by wire transfer, you'll usually pay fees. The sending institution will almost always charge a fee, and sometimes, the receiving institution will impose a charge as well.

The solution here is to avoid using wire transfer to move your money. Time is rarely of the essence with rollovers, and transfers by automated clearing house take only a day or two longer and are typically free of fees. Don't let the immediacy of getting a rollover done lure you into spending more in fees than you really have to pay.

Custodial fees

Some IRA providers charge fees to act as custodian of your IRA. These fees are typically modest, but you should still know how much they are and try to get them waived if possible.

Sales loads and other purchase-related charges

If you invest your new rollover IRA money in mutual funds, be careful to check whether they charge a sales load. These charges essentially divert money away from your investable assets into your new financial provider's pocket, and there's little reason to stomach that immediate loss of investing power. No-load mutual funds are common, and exchange-traded funds also avoid the high cost of an upfront sales load. Certain other types of securities also impose upfront purchase fees that immediately reduce the value of your investable assets. The best course is to avoid such investments and be more fee-conscious in your choice of financial institution and investment options.

Penalties and other problems

Finally, when you roll over an IRA, be sure to avoid some of the problems that can cost you in taxes and penalties. For instance, if you're doing an indirect rollover in which you take possession of your retirement funds, it's essential that you complete the rollover within a 60-day period. Otherwise, your rollover will be treated as a taxable distribution of your retirement money, and you'll not only have to pay income taxes on the amount you withdrew from your old retirement account but also potentially pay a 10% penalty for early withdrawal if you're not yet 59 1/2 years old. Other traps for the unwary are also there to snare you if you're not careful.

Rolling over an IRA can be an extremely smart move, because often, it will allow you to get the most out of your retirement savings. However, you need to be careful to make sure you don't pay fees unnecessarily. By knowing what's out there, you'll be better prepared to see fee problems coming and to take steps to avoid them.

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