Independent analysis identifies six potential costs in “zero-fee” IRAs; one investment choice at account opening can cost a saver more than $170k over 30 years
What Zero Actually Costs
The Six Pillars of Zero
NEW YORK, Aug. 12, 2026 (GLOBE NEWSWIRE) — “Zero-fee” individual retirement accounts (IRAs) cost savers in ways most will never see, according to research published today by PensionBee, a leading online retirement provider. The new white paper, The True Cost of Zero, finds that “zero-fee” IRAs at major U.S. platforms generate revenue through six hidden mechanisms that rarely appear on a saver’s statement.
Applied to a $107,000 IRA — the estimated median retirement savings for Millennials and Gen X — the analysis concludes that even under cost-optimized conditions, “zero-fee” IRAs carry hidden annual costs of 0.16% to 0.32% of assets, or roughly $160 to $340 a year on the modeled balance. However, under common saver behavior, that figure rises to approximately 1.3%, or roughly $1,400 a year.
Platforms may have little incentive to steer savers away from costly choices within “zero-fee” IRAs. The most expensive decision the report identifies is inadvertently choosing an actively managed fund over a comparable low-cost index version. That single choice can cost a saver more than $170,000 over 30 years assuming a 7% return — all within an account marketed as “zero-fee.”
“Industry experts know that investment services do not generally come for free,” said Romi Savova, Founder and CEO 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. The charges described are legal, largely invisible, and compounded by customer confusion.”
Six Hidden Ways “Zero-Fee” Accounts May Cost Savers
The report identifies six hidden charges that quietly generate revenue without appearing in a statement:
- Cash sweep spreads: Idle cash sits in low-yield accounts while the platform keeps most of the interest spread.
- Securities lending: Portfolio holdings are loaned to institutional borrowers, and platforms retain the majority of the fee while savers shoulder the risk.
- Payment for order flow: Trades are routed through a middleman — not a transparent exchange — that pays the platform and reaps the benefits of subsequent trading opportunities.
- Fund expense ratios: An actively managed fund can charge nearly nine times as much as a comparable low-cost index fund (0.98% vs. 0.11%) and can still be available in a “zero-fee” investment product.
- Administrative and service charges: Flat fees or additional charges may apply depending on how a saver uses the account: trading outside of core index-tracking building blocks, requesting a wire transfer, moving funds or incurring foreign exchange fees.
- The fine print: “Zero-fee” labels can apply only below a certain balance or sit alongside costlier advisory options that are easy to select by mistake.
The Knowledge Gap
Low financial literacy may raise the hidden costs associated with “zero-fee” IRAs. Recent polling shows that two-thirds of Americans are not confident in their knowledge of IRAs, even as assets in those accounts reached a record high of $18 trillion in 2026, up from $5 trillion in 2010.
Unlike a 401(k), some Traditional and Roth IRAs let savers trade stocks, bonds, and mutual funds on their own. Expensive investment selections or cash-heavy positions can contribute to additional hidden fee drag in these accounts. For example, one study found that a substantial portion of IRAs remain in cash for years following a rollover, leaving savers susceptible to cash sweep costs identified in the paper.
“Retirement fees are already difficult to understand, even without ‘zero-fee’ marketing,” Savova added. “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.”
The Government Accountability Office (GAO) reports that 40% of Americans do not fully understand their 401(k) fee disclosures, and 41% are unaware that they pay fees at all.
Methodology
The True Cost of Zero is based on independent analysis commissioned by PensionBee and conducted by a Chartered Financial Analyst and Actuary in March 2026. The third-party provider designed the methodology and calculated the figures referenced throughout the report. PensionBee provided the research brief, additional modeling and is responsible for the analysis, interpretation and conclusions presented within. For more information on the methodology or to read the white paper, please visit the link here.
About PensionBee
PensionBee (LON:PBEE; OTCQX:PBNYF) is a leading retirement savings provider, helping people easily consolidate, manage, and take control of their retirement savings. The company manages over $11 billion in assets and serves nearly 330,000 customers globally, with a focus on simplicity, transparency, and accessibility. PensionBee offers Traditional, Roth, SEP, and Safe Harbor IRAs with ETF-backed portfolios from State Street Investment Management, one of the world’s largest asset managers. PensionBee is publicly traded on the London Stock Exchange (PBEE) with U.S. shares available on OTCQX (PBNYF).
Notes
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The information and data set out above, including any projections for investment returns and future performance, is provided solely for informational and educational purposes and should not be relied upon for making financial decisions. Nothing presented here constitutes tax, legal, financial or investment advice. This information does not take into account the specific financial, legal or tax situation, objectives, risk tolerance, or investment needs of any individual investor. All information provided is compiled from publicly available data and research at the time of posting or PensionBee privately commissioned research obtained through third party survey providers. Images, figures, and projections used are derived from the data described, are provided for informational and marketing purposes only and do not represent actual customer returns. Projections and forecasts are based on assumptions and current market conditions, which are subject to change. This information, and any associated customer testimonial or third party endorsement, does not constitute an offer, solicitation, or recommendation to buy or sell any securities or investments. Your investment is at risk. Past performance is no guarantee of future results. PensionBee is not liable for any losses or damages arising from the use of this information.
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PensionBee Inc. is registered with the Securities and Exchange Commission as an investment adviser. We do not provide in-person advice. PensionBee Inc (Delaware Registration Number SR20241105406 ) is located on 85 Broad Street, New York, New York, 10004.
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