"Dave Dodson" <dave_and_darla@[EMAIL PROTECTED]
> wrote in message
news:6a54cf15-568b-46fe-b6e7-7e9240820265@[EMAIL PROTECTED]
> On Mar 15, 2:55 pm, marckas...@[EMAIL PROTECTED]
wrote:
>> I decided I am going to have my 401k to be rolled over into an IRA
>> account. Both of these accounts will be with Fidelity. Even after
>> reading the prospectus for the IRA, I am still concerned about fees
>> and taxes when money gets distributed. Its not that the prospectus
>> has a lot of legalese; if anything it seems uninformative.
>>
>> Is there another method of finding out fees and taxes on a fund when
>> it's distributed?
>
> You speak of an "IRA account" and "both of these accounts" and use the
> future tense. I don't understand why.
Another area of seeming confusion is "prospectus for the IRA".
Prospectuses
describe funds, not IRA agreements. As Dave described, the fees that
funds
charge are described in the fund prospectus. The fees that are charged
for
maintaining the IRA (separate from the fund fees) are described in the IRA
agreement. Fidelity charges nothing to own an IRA; other places may
charge
a nominal fee (e.g. $10/year) for the IRA as a whole, or a fee for each
fund
held within the IRA.
Just to be sure that you are looking at Fidelity's IRA agreements, you can
find them at:
http://personal.fidelity.com/accounts/pdf/sep_supplemental.pdf
(1.9M)
The description of taxes upon distribution from Roth IRAs is on pdf p. 12
("If distributions do not met the requirements for qualified
distributions,
they will be includible in income to the extent ...") Pretty dense
legalese, at least to me. The description of taxes upon distribution from
traditional IRAs is on pdf p. 22, under "Distributions", and seems even
more
dense.
Perhaps the best source of information on IRA taxation is IRS Publication
590; see sections in chapters 1 and 2 entitled "Are Distributions
Taxable?"
(Taxes on IRAs are set by the government, not by the IRA custodian
(Fidelity)).
http://www.irs.gov/pub/irs-pdf/p590.pdf
(1.4M)
> Fees: Fidelity mutual funds, and all other mutual funds, charge
> accounts an annual fee to manage the fund, and sometimes, to pay sales
> expenses.
Fidelity IRAs are usually held in a brokerage account that allow one to
own
not only Fidelity funds, but funds of other families, stocks, bonds, etc.
Buying and selling these securities are subject to Fidelity's usual
brokerage fees, which can be found in the Fidelity IRA package given
above,
on pdf pp. 32-36 (Brokerage Commission and Fee Schedule). If you own
funds,
then you'll also pay the fund fees, as Dave described.
In short, fees include IRA fees (generally none at Fidelity), brokerage
fees
(for trading some non-Fidelity funds and for stocks/bonds), and fees
charged
by the funds themselves. Taxes are set by the government and don't depend
on where you hold your IRA (so you don't need to stick to Fidelity's docs
to
find out about IRA taxes).
Mark Freeland
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