What will a rollover IRA cost me each year compared with my old 401(k)?

By Kaz · Published 28 September 2026 · How this site checks figures

Summary

It depends mostly on the expense ratios of the funds you hold on each side, because, in the DOL's words, "by far the largest component of 401(k) plan fees and expenses is associated with managing plan investments." The IRA side adds any account, custodial or advisory fee, the 401(k) side adds the plan's administrative charges, and some brokers charge once for transfers, closings and wires. Your 401(k)'s annual fee disclosure already lists each investment's cost per $1,000, so pricing the IRA investments you plan to buy the same way gives a like-for-like yearly number.

Where each cost shows up

Cost	Which account	Where you see it
Recordkeeping, legal, accounting (plan administration)	401(k)	Quarterly statement, as the dollar amount actually charged
Loan processing, QDRO, brokerage window, advice	401(k)	Quarterly statement, as individual expenses
Fund operating expenses	Both	401(k): annual fee disclosure, as a percentage and per $1,000. IRA: the fund's expense ratio
Account, setup, and custodial fees	IRA	The provider's pricing
Commissions, loads, surrender charges	Both	401(k): annual disclosure, as shareholder-type fees. IRA: the provider's pricing
Account transfers, closings, wires	IRA	The provider's pricing

The 401(k) quarterly statement leaves out the largest cost. It shows what was deducted for administrative and individual services, but it "does not include charges paid indirectly from your investments," in the DOL's words. Those are the investment fees, and they appear only in the annual disclosure. Some plans also pay administrative costs out of the investment fees, and FINRA notes that some employers cover part or all of the plan's administrative expenses themselves.

The "no-fee" IRA

FINRA does not let a broker-dealer call its IRAs "free" or "no fee" when the investor will pay costs tied to the account or its investments. A $0 account fee is exactly that, a fee on the account. A fund with a 0.50% expense ratio still costs $5 a year for every $1,000 in it.

Putting both on one scale

Take the per-$1,000 figures from the plan's disclosure for the funds you hold now. Convert the expense ratios of the IRA funds you'd buy the same way, then add any IRA account or advisory fee on one side and the plan's administrative charge, annualized from the quarterly statement, on the other. Transfer and closing fees happen once, so they sit in their own column.

Example, with rates chosen only to show the arithmetic: $100,000 in plan funds at 0.40% costs $4.00 per $1,000, or $400 a year, and an administrative charge of $15 a quarter adds $60 a year, for $460. The same $100,000 in IRA funds at 0.10% costs $1.00 per $1,000, or $100 a year, with a $0 account fee. The yearly difference in this example is $460 - $100 = $360, before any one-time transfer or closing fee.

Small gaps compound. In the SEC's example, $100,000 growing 4% a year for 20 years ends at about $208,000 with a 0.25% annual fee, about $198,000 at 0.50%, and about $179,000 at 1.00%. The site's page on what a 1% fee costs over 25 years works through the same arithmetic, and the fee calculator runs it on your own balance across an old plan, a new plan, and an IRA.

Sources

Written by Kaz, an independent publisher.
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