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Unless I'm mistaken I don't have to pay any fees in order to purchase my IRA funds. Correct me if I'm mistaken.

You don't directly pay a fee to open an IRA, but any time you make any sort of trade through Scottrade, they're going to charge you. Your $1k will really buy you $993 of whatever you choose (assuming a market order, which are $7 at Scottrade - a pretty low fee). This is why active trading attrits your retirement accounts, or a taxable account for that matter.

The management fees of about 0.2% for most index funds are not quite negligible, but are about as low as they come for a fund.

Basically, you send Scottrade a check to deposit in your IRA account for $1000. You put in a market order or what not to buy VTSMX, and they will buy you ($1000-7)/(price of VTSMX at the time). Your account value will be $993 right at the time of the trade.

Mark
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