IRA Custodian Fee
Does a $15 IRA custodian fee taken from an IRA account by the custodian count toward satisfying my RMD?
In other words, I DID NOT take a $15 distribution from the IRA, deposit this $15 into my checking account, and then turn around and write a check to the custodian for the fee.
The $15 fee was debited directly from the account by the custodian.
Permalink Submitted by Anonymous (not verified) on Tue, 2010-09-14 20:00
No. The fee is probably not coded as a distribution – I don’t know of any custodian that will do that. You can look at it like a “cost” of the investment. Much like expense ratios to run a mutual fund, 12B-1 fees, etc.
I hightly recommend not taking only RMD-$15 or making an addition to the IRA which will probably be coded as a rollover or contribution (for Roth). The IRS will catch you…..
pko
Permalink Submitted by Alan Spross on Tue, 2010-09-14 20:19
pko is correct.
But IF you wanted to preserve IRA assets, you could take your full RMD, and if the custodian will allow you to pay the administrative fee from your other funds, you could then write a check to the custodian for the fee (from the RMD money or other funds). The net result of this action:
1) Your IRA has $15 more but the $15 will be taxable when distributed
2) Your taxable account has $15 less, so you exchanged after tax money for pre tax money
3) You have a potential misc itemized deduction subject to 2% of AGI (but so small this is only good if you have other such misc deductions to add to it and are not subject to the AMT)
But don’t try to attain this by netting out your RMD as in your post. The custodian will not be willing to reflect to change the custodial fee into a reported distribution and then fee payment.
Note: The above procedure is more attractive when used with a Roth IRA since the added $15 to the Roth will not be taxable when distributed from a qualified Roth.
Note 2: For a TIRA account, having the custodian just deduct the fee from the account is often the better decision because your fee is paid with pre tax money directly from the TIRA. You avoid paying the tax on that $15 as you would have to do if it was distributed to you.
Permalink Submitted by Robert Wright on Fri, 2010-09-17 14:18
Thank you Alan & PKO.