Inherited Roth IRA – RMD – $25 Transfer Agent fee
I have an Inherited Roth IRA account at an investment firm who has recently (this year, 2013) handed over the accounting, record keeping, and customer services to U.S. Bancorp Fund Services to act as “Transfer Agent”. As part of having inherited the Roth IRA, I have opted to take annual RMDs, which is now a legal obligation for myself or I face a stiff penalty for not having done so. The Roth IRA had met the 5-year rule under the original owner, and I am the first (and only) beneficiary. My first RMD was in 2012 and went smoothly with no additional fees through the investment firm. This year, I attempted to take the RMD and U. S. Bancorp (the new “Transfer Agent”) informed me that they wanted to charge me an additional $25 fee to make this Required Minimum Distribution. Keep in mind that there were no prior notifications that any new fees would be in effect, and that this is not an unusual or unqualified distribution.
My question, is a fee such as this ($25) in any way normal or common, or even legally correct for a qualified distribution (my RMD), which is a legal obligation? The fund already charges a $10 annual maintenance fee which was collected for this year.
I have another Inherited Roth IRA, and an Inherited Traditional IRA, each of which I take RMDs from and no additional fees are charged for their distributions. During the years the original owner took their RMDs, there were no additional fees. This is the first time I have encountered an additional fee such as this.
Thank you for any insights and opinions you can share.
Permalink Submitted by Alan - IRA critic on Thu, 2013-12-26 02:09
I have ever heard of a specific RMD processing fee. Have you reviewed a written disclosure of the fee to be sure it is not for something else? You can always do a direct transfer of the inherited Roth to another custodian if you wish, including transferring it into your other inherited Roth, but ONLY if you inherited the other Roth from the same decedent and your RMD divisor is the same for both.
Permalink Submitted by Joe Martin on Thu, 2013-12-26 06:21
Thank you for your reply, Alan. That seems to be part of the problem, as far as any paperwork I received about the new transfer agent there was no mention that any new fees might be implemented. I have no written disclosure to review. The representative on the phone at U. S. Bancorp described it as an “IRA Distribution Fee”, and that it applied to all IRA accounts but gave no details as why it was being applied. I told them not to take the RMD distribution as of the last phone call so that I could try to find out more about it, though I know I must take the distribution by the end of the year. As of yet I haven’t been able to find out much more about it online. This has angered me quite a bit, and I may have to do as you suggested, transfer this Roth to another firm, or combine it with the other Inherited Roth IRA account. Yes they were both from the same person with the same divisor. I am very disappointed with the way both U. S. Bancorp and the investment firm has handled this whole situation. It seems unimaginable that I should be charged $25 just to access my own money under normal, and actually required, circumstances. I have to believe that the investment firm knows that U.S. Bancorp is now doing this, but I am not sure how to talk directly to a representative at the investment firm since all the prior phone access is now being directed to U. S. Bancorp. Once again, thank you for your time. Joe
Permalink Submitted by Alan - IRA critic on Thu, 2013-12-26 15:29
Joe, since a distribution must be reported on Form 1099R, it sounds like they want customers to basically pay for the processing of the 1099R form. Of course, it is also a deterrent to taking withdrawals at all which means more assets under managment. Conversely, if the fee is to pay for the costs of an actual distribution, it would apply to each distribution, but mostly it sounds like they are not properly disclosing WHAT it is for so people can plan. Good chance competitive pressure will make them back off this fee at some point, but they might have to lose a few million in IRA assets first.