An IRA holder may revoke an IRA within the 7 days after the IRA is established. When an IRA holder elects to revoke the IRA, the full amount contributed to the IRA must be returned to the IRA holder.
When an IRA is revoked, no fees or losses can be deducted from it by the financial institution. This is one reason why most IRA investment firms won't let you invest in anything other than a money market during the first week after you open the account.
An IRA is a plan that individuals may establish to arrange and plan for retirement. Generally, an IRA plan allows you to save money and defer taxes until you retire. IRA plans have annual contribution limits that are established by the government and rise gradually with inflation; individuals age 50 and older can make slightly higher "catch-up" contributions.
You don't have to give a reason for revoking your IRA. Revocations may be made because the account holder realized the fees and commissions were too high or the investments were unsuitable. That's why it's wise to investigate the details of the IRA before you open an account.
Most people who open IRAs are do-it-yourself investors, so the primary costs they face are trade fees and commissions. But robo-advisors are gaining popularity. Robo-advisors are digital platforms that provide automated, algorithm-driven financial planning services with little to no human supervision. A typical robo-advisor collects information from clients about their financial situation and future goals through an online survey, and then uses the data to offer advice and/or automatically invest client assets. These firms typically charge typically 0.25% to 0.50% of the assets under management annually but fees can be even higher.
IRA firms also have account maintenance fees, transactions fees (commissions), low balance fees, and account transfer/termination fees. Some charge substantially more in commissions to buy mutual funds that are outside of a certain group of the most frequently traded funds. Or they may change nothing at all to buy or sell a select group of funds, often those that are managed by the brokerage.
It's wise to avoid revoking an IRA on or around key dates like calendar years and the day federal tax returns are filed. If you do, you may get an erroneous form 1099-R. This will complicate your tax filing and cause you to spend your time trying to get that form corrected by the brokerage.