Wells Fargo IRA Review
WellsTrade is the brokerage division of Wells Fargo & Company. In addition to general securities trading, the broker offers a variety of IRAs and retirement resources. This article will explore these features and see how the firm compares to other brokers that offer retirement accounts.
IRA Choices
Several different IRA types are available at WellsTrade. There are the Roth and Traditional accounts. These are basic accounts that most individual savers will open. The Roth IRA was established for people who expect to be in a higher tax bracket during retirement, because contributions are taxed before they go into the account. The Traditional version is designed for savers who are in a higher tax bracket while working. Contributions receive a tax deduction when they are deposited into the IRA, and are taxed when they are withdrawn—hopefully during retirement when the account holder is in a lower tax bracket.
The broker also offers SEP and SIMPLE IRAs. These accounts are designed for small businesses and self-employed persons. Small business is defined as 100 employees or less. Both these plans have much higher contribution levels compared to Roth and Traditional accounts.
WellsTrade clients can also rollover or transfer an IRA. In a rollover, an old employer's plan, such as a 403(b) or a 401(k), is changed into an IRA at WellsTrade. IRS regulations allow one rollover every twelve months. In a transfer, an existing IRA at another brokerage house is simply moved to WellsTrade. Uncle Sam allows an unlimited number of these.
ETFs and Mutual Funds for IRAs
Retirement savers often look to funds, and WellsTrade certainly has good choices on the mutual fund side. There are over 9,900 mutual funds open to new investors on the broker's site. Of these, over 2,500 come with no load and no transaction fee.
There are some target-date mutual funds available at WellsTrade. These are securities that are designed for retirement savers. The investments are gradually adjusted to become less risky as the target-date approaches, which is when retirement is expected to begin. Unfortunately, the broker's screener doesn't have the ability to search for them.
There is a $35 transaction fee at WellsTrade for non-NTF funds. Using a living, breathing agent over the phone to complete the trade increases the charge to $60.
The WellsTrade ETF screener is able to generate results from a variety of criteria, such as Lipper rating and economic sector. An advanced version can be used, which has more criteria. Unfortunately, WellsTrade does not offer any commission-free ETFs, although all US-listed funds can be traded at the broker's regular pricing schedule.
Wells Fargo IRA Fees and Commissions
There is a $25 low-balance fee at WellsTrade that is applied once per year. Thankfully, there are two methods to avoid this fee.
One is to simply have $5,000 or more in your IRA when the broker checks the balance on June 30th. The fee is debited in September.
The other method is to establish either $25,000 in bank deposits or have $50,000 within the Wells Fargo family of companies
(this includes brokerage accounts). Alternatively, you can pay $30 per month for membership in the Portfolio by Wells Fargo
program to receive the discount.
Although the low-balance fee is somewhat of a nuisance, there is no charge to establish an IRA, and no amount of activity is required. Terminating an IRA, however, costs $49.95. WellsTrade does waive the fee for customers over the age of 70½, or in the event of death or disability of the account holder. Moving an IRA to another company also incurs a $49.95 charge.
Trades carry the same price in an IRA as in a non-retirement account. Transactions of stocks and ETFs cost
$0.
The broker charges an extra $25 to place a trade over the phone with a live representative. Option
trades cost $0.675 for each. Bonds are priced on a markup/markdown basis.
IRA Education and Tools
The WellsTrade site has only one IRA calculator. The broker calls it the My Retirement Plan. The tool takes a variety of information, such as present income, age when retirement will begin, household emergency savings, and the user's present age; and then it estimates how much money the user must save every month while still working. The calculator can make its estimates with or without Social Security benefits.
The tool displays pie charts and graphs in the final results. It also shows tips on how to increase the size of a nest egg to avoid outliving it. My Retirement Plan is able to look at situations where the stock and bond markets may decline in value, and the effect such declines can have on an IRA. The tool also presents the total amount that needs to be saved, and how much the nest egg will grow based on average market performance.
Retirement Assistance
WellsTrade clients who aren't confident in their own retirement planning skills can reach out to Wells Fargo Advisors. This is an affiliated company of investment advisors who can help customers chart a course to retirement. The service does cost extra. The Wells Fargo affiliate has several offices throughout the United States.
In addition to the retirement advice and financial planning options available with Wells Fargo Advisors, the company also provides on-going portfolio management services. Clients who would rather let professionals make trading decisions for their accounts can simply give discretionary authority to Wells Fargo.
Wells Fargo Bank IRAs
On the other hand, retirement savers who don't trust the securities markets can open an IRA with Wells Fargo Bank. These
retirement accounts are invested in FDIC-insured bank products. These are typically CD's and savings accounts. In addition to the
Roth and Traditional accounts, Wells Fargo also offers rollover services to bring an old employer's plan to the bank.
The IRA CDs and Savings accounts rates you'll get on the Wells Fargo Bank IRA depend on where you live. You can see them
under think link »
Comparison
WellsTrade doesn't provide a lot of educational resources for its customers. The broker only has one calculator and a few articles. Vanguard,
by comparison, has 10 IRA calculators. Fidelity and TD Ameritrade have a lot more educational material, including videos.
Commissions at WellsTrade are higher than the average. Many brokers charge less.
Webull,
for example, cut all of its commissions and fees to $0.
Although WellsTrade's low-balance fee is only $25, most brokers today charge nothing. Schwab and Firstrade, for example, have no on-going
IRA fees of any type. While Vanguard does have an annual IRA fee, it can be avoided simply by enrolling in e-delivery of statements.
WellsTrade's $49.95 IRA closeout fee is quite a bit higher than those charged by other firms.
Charles Schwab customers, for example, pay $0.
Charging $49.95 to transfer a retirement account is also fairly steep.
Wells Fargo IRA Review Conclusion
WellsTrade offers retirement savers some good options for IRAs. It's mutual fund selection is particularly good. But with high fees and
limited educational resources, there are better options for IRA out there, with no fees and much
lower commissions.
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Updated on 1/26/2024.
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