Advisory Fees in a Roth IRA
My client has a large Roth IRA and would like to deduct the advisory fees charged to the account. His rationale is that two thirds of the account value is money that’s been taxed, so he’ll deem that to be the portion of the total account value that paid the fee. How does the IRS view the fee payment?
Permalink Submitted by Alan - IRA critic on Mon, 2015-02-16 18:23
If the fees were paid directly from an IRA account, they cannot be deducted regardless of how the IRA is funded. If the fees were paid from his taxable savings they can be deducted if misc deductions exceed 2% of AGI and he can otherwise itemize. If paid from taxable account funds, an itemized deduction is available whether the IRA is a TIRA or Roth. For a Roth IRA it is better to pay fees from outside funds, for a non Roth IRA it is usually better to have the fees directly deducted from the IRA since it is being paid with pre tax funds and most people do not itemize, do not have misc deductions in excess of 2% of AGI, or lose the deduction due to AMT.