Sales Fee on IRA transfer

Submitted by Anthony Frayling on Sat, 2021-01-23 01:33

In order to consolidate my pension provision, I recently transferred assets from an existing regular IRA to an existing IRA rollover, in the belief that there would be no fees or charges. According to Investopedia:

‘As long as the money goes into another similar-type account, and no distribution is made to you, the transfer does not incur a penalty or fee’

When the transfer was complete I was horrified to see that a 3.5% ‘Sales Charge (Made at the $100,000 discount level)’ has been deducted in my receiving account statement.

Surely this cannot be correct, or am I missing something? The total sales charge amounts to approx $1500 – not an insignificant amount.

Thanks in anticipation of you answers.

Anthony Frayling



Submitted by David Mertz on Sat, 2021-01-23 02:48

This does not appear to be a charge for the transfer of the IRA itself.  It seems like what might have been intended to be an in-kind transfer actually ended up resulting in a sale of a class B shares of some fund (back-end loaded).  Perhaps class B shares were liquidated in the old IRA and the cash proceeds (along with a debit for the sales charge) were moved to the new IRA.  In other words, it seems to be a charge imposed by the particular investment that had been in the old IRA.

Submitted by Anthony Frayling on Sun, 2021-01-24 14:22

The receiving show the incoming investment value as the full sum. A footnote explains the charge like this: ‘Sales charge rate. Sales charges are based on the size of your purchase, current holdings or future purchases. The sales charge rate you may have paid can vary from the rate disclosed in the prospectus due to rounding when calculating the share price and number of shares purchased.’ So it looks like a sales charge at the receiving end. Is there normally a sales charge like this when making an investment into an IRA? Even if there is, I’m guessing (hoping) it should not apply to a transfer.

Submitted by David Mertz on Sun, 2021-01-24 14:36

This now sounds more like a purchase within the receiving IRA of class A shares of some fund.  Class A shares have a front-end load, a sales charge imposed at the time of the purchase of the shares.  Since the purchase occurred inside an IRA, the sales charge is paid from the IRA.  So this seems to be the result of the particular investment that you chose within the new IRA rather than anything having to do with the movement of funds between IRAs.

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