Finding out fund's fees and taxes

You speak of an "IRA account" and "both of these accounts" and use the future tense. I don't understand why.

Fees: Fidelity mutual funds, and all other mutual funds, charge accounts an annual fee to manage the fund, and sometimes, to pay sales expenses. This fee is called the expense ratio, differs from fund to fund, and is clearly spelled out in the prospectus. There also is a standard example of how much the fees will amount to over a period of time so that you can compare funds on an apples-to-apples basis. Fidelity does not charge distribution fees.

Taxes: Distributions from an IRA account are taxed as ordinary income in the year you take the distribution. Depending on your state law, they may also be subject to state income tax. If you have made non- deductible contributions to any of your IRA accounts, the portion of you distribution that can be attributed to the non-deductible contribution is not taxed. This is computed on IRS Form 8606, the same form that you fill out when you make non-deductible contributions. It will not matter which fund you use for your IRA; the taxes will be computed the same way.

I hope this helps. Maybe I totally misunderstood your question. If so, post again.

Dave

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Another area of seeming confusion is "prospectus for the IRA". Prospectuses describe funds, not IRA agreements. As Dave described, the fees that funds charge are described in the fund prospectus. The fees that are charged for maintaining the IRA (separate from the fund fees) are described in the IRA agreement. Fidelity charges nothing to own an IRA; other places may charge a nominal fee (e.g. $10/year) for the IRA as a whole, or a fee for each fund held within the IRA.

Just to be sure that you are looking at Fidelity's IRA agreements, you can find them at:

(1.9M) The description of taxes upon distribution from Roth IRAs is on pdf p. 12 ("If distributions do not met the requirements for qualified distributions, they will be includible in income to the extent ...") Pretty dense legalese, at least to me. The description of taxes upon distribution from traditional IRAs is on pdf p. 22, under "Distributions", and seems even more dense.

Perhaps the best source of information on IRA taxation is IRS Publication

590; see sections in chapters 1 and 2 entitled "Are Distributions Taxable?" (Taxes on IRAs are set by the government, not by the IRA custodian (Fidelity)). (1.4M)

Fidelity IRAs are usually held in a brokerage account that allow one to own not only Fidelity funds, but funds of other families, stocks, bonds, etc. Buying and selling these securities are subject to Fidelity's usual brokerage fees, which can be found in the Fidelity IRA package given above, on pdf pp. 32-36 (Brokerage Commission and Fee Schedule). If you own funds, then you'll also pay the fund fees, as Dave described.

In short, fees include IRA fees (generally none at Fidelity), brokerage fees (for trading some non-Fidelity funds and for stocks/bonds), and fees charged by the funds themselves. Taxes are set by the government and don't depend on where you hold your IRA (so you don't need to stick to Fidelity's docs to find out about IRA taxes).

Mark Freeland snipped-for-privacy@sbcglobal.net

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Thanks for the advice, it has helped. Sorry for the confusion.

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