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New $30.00 Fee Imposed For Roth IRA Accounts By U.S. Bank

Sunday, May 29, 2011 - 11:57 AM
While I was a student I had earned enough to open a small Roth IRA with U.S. Bank.  It was in the form of a 5-year CD opened in 2009 paying 4.00% APY. At no time was it disclosed to me that there was a fee associated with opening or maintaining a Roth IRA account.  At the end of the first year I received a notice that there was a $10.00 fee imposed.  I paid the fee under protest.  Now during this second year U.S. Bank has sent a notice that the annual fee is increased to $30.00.  I wanted to close out my account with U.S. Bank because of this unethical practice but I found out that I cannot close out account because U.S. Bank is imposing a very heavy early withdrawal penalty for closing out a 5-year CD.  How is it that a Bank can change the terms and conditions mid-way, but I cannot close my CD without penalty, if I don't agree to the change?  Essentially, it looks like they can just increase the fee each year to eat up the interest they are paying and I have no recourse.  I am wondering if anyone else has encountered this problem and how you can go about resolving this.  The CSR has basically said there is nothing I can do other than pay the fee or incur the early withdrawal penalty to close out the C.D.  I had a checking account with U.S. Bank which I closed out based upon a notice that there would be a monthly maintenance fee of $6.95 for the checking account.

 
8
InforayInforay11 posts since
Aug 23, 2010
Rep Points: 300
1. Sunday, May 29, 2011 - 2:33 PM
Scumbags. Read the disclosure(s) provided when you opened the account, hopefully in your files - not online where subject to change arbitrarily.  If there is no reference to maintenance fees (in any amount) I would dedicate myself to raising hell, locate other account holders in similar positions and pool resources to engage a reasonable and competent attorney (assuming they aren't mutually exclusive) qualified to do battle.  For vanilla CDs it would be extremely unusual for a bank to impose fees as there is no "maintenance" to speak of; Roth IRAs may be a somewhat different matter due to additional record-keeping requirements, but anything is possible in their quest to pick your pockets.  In any case, it is best to prepare your defense from evidence they previously provided.  And get the word out. Abusive practices as these are best fought on the stage of bad publicity, spreading the word as broadly as possible of exemplary obnoxious policies.  This was a good place to start, but only a beginning.
8
CraigPDCraigPD94 posts since
Jun 12, 2010
Rep Points: 336
2. Sunday, May 29, 2011 - 5:28 PM
This is very much like a discussion we have been having in these threads for several months about changing terms on CDs after they are opened. 

I will note, IRAs are typically handled differently. And a custodial fee on an IRA is typical -- but of course, it must be disclosed up front. You say you were never notifed of the custodial fee before opening or even until they hit you with it. Of course, do go back and read all the materials involved.

Still, regardless of whether you were notified of the fee, retroactive changes to it without you having the ability to close out unsanctioned is a very serious concern. It is very much the same as the situation we have been discussing about the early withdrawal penalties or other things on CDs being changed after the CD is opened -- prime example being the thread about the retroactive changes to the early withdrawal penalty recently implemented by Fort Knox Federal Credit Union. 

This is so similar that I think I will take the unusual step of starting another thread with that angle in the headline.

Thanks for letting us know. 
6
me1004me1004370 posts since
Jan 16, 2010
Rep Points: 2,571
3. Sunday, May 29, 2011 - 8:27 PM
I really appreciate you taking an interest in this problem with U.S. Bank.  As a student with limited resources, every dollar counts and a $30.00 fee is unconscionable for a Roth IRA with $2,000.  I would not have placed the money with U.S. Bank because at that time, there were many other institutions paying a similar rate for Roth IRA accounts.  This bank just happened to be conveniently located in the grocery store in California, where I did my weekly shopping.  Nobody told me anything about the maintenance fee or the $30.00 close-out fee which I will also have to pay when I close out the account. 

They are not doing any maintenance on my account.  The interest on this C.D. is only paid once a year; they do not issue me a 1099, other than the one form where they report it to the IRS; and they do not mail me any statements, other than notice I received to change the terms.  So why $30 maintenance -- how is it linked to maintaining my account?  They also said that if I want to close-out the Roth IRA account there are serious penalties which from my understanding will probably eat into my principal.  I have the letter dated May 10, 2011 from U.S. Bank and I had asked that since they were changing the terms each year, I would like to just close out my CD without penalty.  The CSR just "Sorry, if you close out, you have to pay an account close-out fee of $30 plus the penalty for early withdrawal." 
5
InforayInforay11 posts since
Aug 23, 2010
Rep Points: 300
4. Monday, May 30, 2011 - 5:16 PM
It really grates on my nerves that these shyster banks use our country in their corporate names. BofA and U.S. Bank are merely squeezing the small customer for what ever they can get out of them. Pathetic, and it's a sad commentary on the state of our society.
2
ShorebreakShorebreak2,608 posts since
Apr 6, 2010
Rep Points: 14,135
5. Sunday, June 5, 2011 - 10:47 PM
        I have the same problem with two small roth ira accounts that belong to me and my wife.Please go to www.helpwith mybank.gov and fill out the complaint form to the Office of the Comptroller of the Currency.If you go on this web site and click on fees and read the second paragraph you will see it is stated that the fee cannot be changed in the middle of the contract.Please help with a complaint.   Thanks Martin
3
mealwormmealworm2 posts since
Jun 5, 2011
Rep Points: 9
6. Sunday, June 5, 2011 - 11:05 PM
         Complain at www.helpwithmybank.gov look under fees .This is wrong.
3
mealwormmealworm2 posts since
Jun 5, 2011
Rep Points: 9
7. Sunday, June 5, 2011 - 11:16 PM
I sent a letter to the president of U.S. Bank and received this response:

Thank you for your patience as we researched your concerns.

We are sorry to hear of your disappointment with the increase of the annual fee for your IRA account.  Please be assured, decisions such as this are not made without careful consideration for our customers.  As with any industry, the banking industry is constantly changing, and it is fair to say the products and services offered today are very different from those offered even in the recent past.  At U.S. Bank, we strive to focus on the entire customer relationship while making our accounts accessible to as many people as possible and ensuring that our products and services are priced fairly.

When you opened your IRA with U.S. Bank, you were provided with the IRA Custodial Booklet, acknowledgement of the receipt of which is evidenced by your signature on the IRA Application Form dated March 9, 2009.  On page 1, section 8.04 of the Custodial Booklet, it states “We may change the fees at any time by providing you with notice of such changes”.  An IRA Plan may have several accounts within it; therefore, this change is to the Plan and not the specific accounts within the Plan.  In other words, because you have only one Plan, you will be charged one $30.00 annual fee.  The terms of your IRA CD account however will remain the same.

Please remember that retirement accounts, like an IRA, provide the owner with tax benefits.  In terms of record keeping, compliance and tax reporting; IRA accounts are complicated products.  Due to IRS rules governing these accounts, the cost to the Bank for maintaining these accounts is higher than the costs associated with other non-retirement accounts.  Ultimately, the fee helps offset some of those costs.  While this change reflects a general adjustment in our pricing structure, it does not signify a lack of appreciation for your business or that we are not sensitive to the financial challenges many consumers are currently facing.

Again, we regret any frustration this matter may have caused for you.  We truly value you as a U.S. Bank customer and we appreciate your business.  We also understand this may not be the response you sought, but we remain hopeful you will understand our position in this matter.  

Sincerely,

Victoria L. Wohl
Executive Communications
for Richard K. Davis,
Chairman, President & CEO
U.S. Bancorp


I have written back that the branch that I opened by account was basically a counter in a grocery store manned by one, at most two, employees.  I kept all the paperwork and do not have any Custodial Booklet.  I was provided other papers which discuss everything (including penalty for early withdrawal) but nothing about any maintenance fees or charges.  Even if some booklet had arguably been provided, there was no place to sit and read through it.  I asked the representative at the counter whether there were any fees associated with the account and she said there were not.  I think I was entitled to rely on her statement.  I have also filled out the complaint form to the Office of the Comptroller of the Currency. I have requested that I be allowed to transfer my account to another credit union or bank without the early withdrawal penalty, but have not heard back.
7
InforayInforay11 posts since
Aug 23, 2010
Rep Points: 300
8. Thursday, June 9, 2011 - 1:34 PM
http://redtape.msnbc.msn.com/_news/2011/06/09/6821261-new-usbank-ira-fee-can-eat-most-of-savers-interest
2
TJJacksonTJJackson13 posts since
Jun 1, 2011
Rep Points: 91
9. Monday, June 13, 2011 - 12:11 AM
I am just providing an update in this matter.  I have received a letter from U.S. Bank yesterday, allowing me to withdraw the funds from my Roth IRA without any closing cost and without the early withdrawal penalty.  Apparently, it was in response to the complaint I filed with the Comptroller of the Currency.  I will be withdrawing the money and I do hope others will also have the opportunity to do the same.   I was just thinking that if you had a one-year or two-year IRA CD paying about 1%, you might actually lose principal with the fees they are collecting.  Additionally, this is not an "investment account" as their rep. stated.  I can understand a fee in case of an actively managed investment account.  Ours is a plain vanilla CD and it really does not cost them, except for the fact that they don't want to pay the higher interest in this low interest rate environment.  Even now, on their website they advertise that CDs and money market IRAs had $0 maintenance fees!   U.S. Bank said they were allowing me to close out the CD as a result of our having objected to their deducting the fee from the Roth IRA -- I had done that last year to no avail.  I know we will no longer get the 4.25% but better to take the hit than worry about what they will charge next year and have to deal with a dishonest bank.  Thank you very much for the assistance received from this forum.  I am very grateful to you and to Bob Sullivan of msnbc.  The outrage worked in my case, and I hope others will also be able to take their money out of this bank.
7
InforayInforay11 posts since
Aug 23, 2010
Rep Points: 300
10. Monday, June 13, 2011 - 8:11 AM
Excellent work!  If others make a similar effort and follow your example banks may eventually consider acting in blatant disregard (abuse) of customers' interests a greater peril to their well-being.  Failing that, class action litigation w/ obscene awards is the next best method.  Forget government financial regulatory reform.  If we've learned anything the past 2-3 years it’s that government legislators and the bank lobby are inseparable bedfellows.
2
CraigPDCraigPD94 posts since
Jun 12, 2010
Rep Points: 336
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