Millions of Americans who opened a "zero-fee" individual retirement account believing they had sidestepped Wall Street's fee machine may be paying more than they realize, according to new research from PensionBee, an online retirement provider.
Its new white paper flags six revenue mechanisms embedded in supposedly free IRAs that rarely show up on a saver's statement, a finding that comes as assets flowing into IRAs through 401(k) rollovers accelerate across the retirement industry.
Applied to a $107,000 IRA balance, which is roughly the median retirement savings for Millennial and Gen X households, the PensonBee report, which draws on an independent analysis, found that even a cost-optimized account carries hidden annual charges of 0.16% to 0.32% of assets, or $160 to $340 a year. Assuming typical saver behavior, that figure climbs closer to 1.3% annually, or about $1,400 a year.
The most costly single mistake the report identified stems from a hypothetical saver unknowingly choosing an actively managed fund over a comparable low-cost index fund inside a "zero-fee" account. Over 30 years, assuming a 7% annual return, that one decision can drain more than $170,000 from a retirement balance.
"Industry experts know that investment services do not generally come for free," said Romi Savova, founder and chief executive of PensionBee. "That may not be as clear to someone opening an IRA for the first time, which is why we commissioned this research to measure what 'zero' actually costs."
Among numerous costly friction points and pitfalls, the report pointed to cash sweep spreads, with cash sitting idly in low-yield accounts while the platform pockets most of the interest.
Securities lending, often pitched as a way for investors to access liquidity, could also be costing retirement savers. As PensionBee tells it, IRA platform providers are able to loan a saver's portfolio holdings to institutional borrowers, collecting a fee even as the saver shoulders the risk. Similarly, the study sounded a note of warning on payment for order flow, an arrangement through which trades are coursed through a middleman – not a transparent exchange – that pays the platform.
Read more: SEC takes aim at payment-for-order flow
Possibly hitting closest to home among investors, the report flagged the fact that an actively managed fund that can charge nearly nine times as much as a comparable index fund could still be made available in a "zero-fee" investment product.
Retirement savers might also fail to see charges tied to wire transfers, fund transfers or foreign exchange conversions, the PensionBee report sad, as well as fine print that limits "zero-fee" pricing to certain balances or pairs it with costlier advisory tiers that – despite the well-documented benefits of advice in retirement plans – are easy to opt into by accident.
The research lands as IRA balances swell industry-wide. Investment Company Institute data shows IRAs held approximately $19.2 trillion by the end of 2025, nearly double the assets held in workplace 401(k) plans, a shift driven largely by rollovers rather than annual contributions. That growth means a widening pool of savers face IRA fee structures for the first time, often without the tools to evaluate them.
PensionBee pointed to a separate finding that a substantial share of IRAs remain parked in cash for years following a rollover, leaving that money exposed to potential erosion from cash sweep spreads.
Read more: 401(k) rollovers fraught with challenges
The knowledge gap compounding the problem is well documented by the Government Accountability Office, which reported that 40% of Americans do not fully understand their 401(k) fee disclosures, and 41% are unaware they pay any fees at all.
"Retirement fees are already difficult to understand, even without 'zero-fee' marketing," Savova said. "Our findings suggest that this practice rewards financial expertise and penalizes a lack of it, meaning the saver least equipped to catch hidden fees may pay the most."
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