are retirement account management fees tax deductible?
When to deduct contributions for a year depends on the tax year on which the SEP is maintained. If the SEP is maintained on a calendar year basis, you deduct the yearly contributions on your tax return for the year within which the calendar year ends. If your client itemizes on Schedule A and is able to claim an income tax deduction for Tier II fees and expenses, it may be best to deduct all fees from their taxable account. If you pay an investment manager to manage your portfolio, then you may be able to deduct the fees that you pay for this service, as they are considered deductible expenses by the Internal Revenue Service (IRS) as long as certain conditions are met. This fact sheet provides a quick look at preventing incorrect deductions for retirement plans. Qualifications to claim deductions. If you are self-employed, you may qualify for a tax deduction for contributions you make to a qualified retirement plan. You must have self-employment income to qualify. Custodial Fees for Retirement Plans. Many traditional retirement plan and account custodians charge some sort of annual maintenance fee. If the fee is paid for with funds inside the account or plan, then they cannot be deducted. A client may deduct financial planning and asset management fees only if they itemized deductions on Schedule A of IRS Form 1040. Moreover, these fees are deductible only to the extent that they, plus other miscellaneous fees and expenses, exceed 2% of the clients AGI. These deductions include: (For more, see: An Overview of Itemized Deductions .). Professional management fees for taxable investment accounts (fees paid to robo-advisors count for this). Legal and accounting fees relating to investment management for taxable accounts or collecting investment property. If you have some control over when you pay these fees, then you may be able to garner a larger deduction by lumping as many of them as possible in one year. This might be achieved by paying annual bills at both the beginning and the end of the year, in January and December. The self-employed retirement plan deduction may not be allowable if: Form 1040, Schedule SE, Section A (if applicable), Line 4, is less than the amount on Form 1040, Line 28. If the aggregate of these fees and expenses is less than 2% of the client's AGI, no deduction is allowed. If these items exceed 2% of the clients AGI, then the deduction is limited to the amount which exceeds this threshold. Therefore, if the client is not allowed a tax deduction, or if the deduction is small, it may be better to change the accounts from which these fees are deducted. But be careful, as the IRS has some well codified rules to consider. Account Deductibility Rules.
Yes, if you are self-employed.