![Vanguard](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhGjqJsq2JcgY0n5_8eRKJFKQkmtt0kql_ETJB791-9e-zGf_1gbYQG2b1HKvok5hJLcDISHKcHl9juAb5Jq-2FWpoFhfsQ659-s3OW5d_g-IbvdJHZAL4X0yPmFUhGUL259LkoVQ/s400/Vanguard-Logo.gif)
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"Four fees replaced by one account service fee
The following annual $10 account-related fees have been eliminated:
- The custodial fee on traditional IRAs, Roth IRAs, and SEP–IRAs with a balance of less than $5,000.
- The maintenance fee on index fund accounts with a balance of less than $10,000.
- The custodial fee on education savings accounts (ESAs) with a balance of less than $5,000.
- The low-balance fee on all nonretirement accounts with a balance of less than $2,500.
The fee applies to all IRA accounts (traditional and Roth) as well as general taxable accounts with balances below $10,000. It does not apply to:
- Employer-sponsored retirement plan accounts.
- 529 college savings accounts.
- Money market "sweep" accounts held through Vanguard Brokerage Services.
- Accounts held through financial intermediaries.
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Analysis of the fee change
![MutualFunds](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjcTkr8E0abKBNkcZqulvG5Qov1NSUjxCzFJhI6YIb9F4ApzHUm5GypJCVJwAzh8aqtXU2-t4Idpy3QupqhqTnPm7f4peSXJsKvx3OFYYImGh0WvYmoc2zworPMIzXoSI8YH_otrg/s400/VanguardFeesWaived.jpg)
Say our portfolio has 5 Vanguard mutual funds each with a balance of $7500 (<$10k). Earlier we were paying a fees of $10 per annum to cover the expenses for each fund. This came to a total of $50. But with the new fee structure we have to pay 5*$20 = $100! Which means that our portfolio's management fees will increase by [ $(100-50)/5*7500]*100 = 0.13%!
![INFLATION](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhNiP3NSMp2QYU-sMrJbrr2lyZ0XcQQZjlBHDGgU3sFrXxeqzpEkOJn6jGFn3StEoUvPkwp4WZdkpc4QtIciTtecuuaQCF4CzYD1XUxOXjxv9dT_BmfFw4ORQttM7LCRAIm6nF9wQ/s400/VanguardFeesWaived-3.jpg)
One of the ways to get it waived is to invest more than $10000 in each Vanguard mutual fund of the portfolio. But this might not be a practical solution since assets are allocated and balanced according to certain guidelines.
On digging further at Vanguard we found a couple of ways to get this fees waived:
- Sign up for account access on Vanguard.com and choose electronic delivery of shareholder materials, including statements, confirmations, fund reports, and prospectuses.
- Maintain total Vanguard mutual fund assets of $100,000 or more.
![MUTUALFUNDS](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjlfK_cRhu8TgTAwChyIRRCWkA99ym8ayYSuRkkQfmr0_FaAabAx6Lg-weFWQj1H2VVyvTDQqRNAAgTXp9t6vNGurk5zTz8peUy1kRhic50h5fBUrwRWDJ10ML7rOBiqc0SaEU_9Q/s400/VanguardFeesWaived-2.jpg)
Image Source(s): iStockPhoto