Advisers Uncover Hidden IRA Costs, Curb Cash Drag

Individual retirement accounts have absorbed a growing share of US retirement wealth as workers roll assets out of 401(k) plans and take more responsibility for investment choices. “Zero-fee” platforms can still earn revenue through cash-sweep spreads, securities lending, payment for order flow, fund expenses and administrative charges. Financial advisers can add value by tracing those costs across disclosures, comparing investment options and ensuring long-term savings are not left in low-yield cash.

PensionBee said on Aug. 12, 2026, that an independently conducted analysis of a $107,000 IRA found hidden annual costs of 0.16% to 0.32%, or $160 to $340, even under cost-optimized assumptions. Typical customer behavior could lift the burden to about 1.3%, or $1,400 a year. Choosing an active fund charging 0.98% instead of a passive fund at 0.11% could reduce returns by $171,000 over 30 years, assuming a 7% gross annual return. Nearly 30% of rollover IRAs remain in cash for at least seven years, underscoring the case for advisers to review sweep yields and reinvest idle balances.