are ira administrative fees tax deductible
Dear Vince, Certain IRA administrative fees, whether or not you're currently taking distributions, are deductible, but they have to be paid by the account owner's non-IRA funds. You're right that investment fees paid to produce taxable income are tax-deductible. These expenses are miscellaneous itemized deductions subject to an overall reduction of 2 percent of adjusted gross income. If you pay for advisory fees from non-account funds, you can deduct the cost. You would accomplish this by writing a check from a non-retirement account, or using a credit card. Keep the fee statement so that you can back up the expense if the IRS questions it. George Saenz. Dear Vince, Certain IRA administrative fees, whether or not you're currently taking distributions, are deductible, but they have to be paid by the account owner's non-IRA funds. You're right that investment fees paid to produce taxable income are tax-deductible. I also see that investment fees paid to produce taxable income are deductible. My question is: If I pay a large brokerage firm to manage my IRA and it charges fees to the account, are these fees tax-deductible since I am taking an annuity from the account and it is included in my taxable income? -- Vince. Fees charged within your retirement account are not deductible. The Internal Revenue Service lays down the rules on retirement accounts such as Individual Retirement Accounts and 401Ks. For example: you can deduct contributions to a traditional IRA, up to an annual limit, or take withdrawals tax-free from a Roth IRA. A Roth IRA that is eligible for qualified distributions has the special case where the after-tax portion is 100%. Michael, Non-deductible contributions don’t create an issue for IRAs. The GROWTH on IRAs is all taxable, which is what enables the deductibility of fees paid to manage it. Additional wrinkle: Similar to a Roth IRA, a Traditional IRA can have basis in the form of non-deductible contributions. For each type of account with basis there is then a portion of after-tax money and a portion of pre-tax money. Indeed, I’m afraid it’s not appropriate to have 401(k) fees deducted from an IRA. They can be paid from the 401(k) directly (which would be pre-tax by virtue of the account), or paid with outside dollars and deducted as a miscellaneous itemized deduction subject to the 2%-of-AGI floor. But the IRA should only pay fees attributable to itself. In fact, the IRS even allows investment advisory fees to be deducted when paid on behalf of retirement accounts like IRAs and 401(k) plans. Alternatively, the IRS also allows investment advisory fees to be paid directly from a retirement account-which effectively allows the fee to be paid with 100% pre-tax dollars. I understand that individual retirement account fees deducted from the investment account are not tax-deductible. I also see that investment fees paid to produce taxable income are deductible.
Yes, If you pay for advisory fees from non-account funds, you can deduct the cost.