When Fees Attack: Rolling Over A 401(k) Can Trigger Big-Time Charges



Gary Waters/Getty Images/Ikon Images

Each year Americans pay billions of dollars in fees when they roll over their retirement accounts — and those fees can be hard to see.

Elizabeth Merry, 49, a marketing manager at a technology company, has saved up $150,000 in a 401(k) there. At the end of the year, though, she’s leaving her job, and so she was thinking about rolling over that money into an IRA with the help of her financial adviser with Ameriprise Financial. She pays him $1,000 a year to manage her money.

“I asked him if there was any other associated fees for doing this, and the response that I got verbatim is ‘there are no transfer fees or other tax consequences since we will be doing a direct roll-over’ — so no mention of fees or loads or anything,” she says.

But it turns out Merry had already rolled over about $50,000 from some other old 401(k)s at prior jobs. And she’d used this same adviser. She didn’t think she’d paid any fees then. Merry responded to a post in in NPR’s Your Money and Your Life Facebook group and explained her situation, and NPR took a look at her financial documents

Turns out, her adviser put her into mutual funds with so-called load fees of 5.75 percent. Load fees are basically upfront sales charges. Researchers we spoke to say you should never pay a load fee — and especially nothing that high. In her case, Merry got hit with about $2,300 in load fees, and she says she had no idea she had paid that.

“It’s appalling. It’s really appalling. I’m embarrassed and mortified because that’s a lot of money and the amount that I rolled over wasn’t that huge of an amount,” she says. “But that was really some blood, sweat and tears that I had put into that money, and I lost almost 6 percent on some of that stuff, besides the annual fee that I was paying this guy.”

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