IRA investment management fees
There are 2 scenarios I would appreciate some guidance with that pertain to charging advisory fees on an IRA for advisory services on another account.
1. If a client wants me to manage their 401k through work, can I charge a higher fee on their IRA under my management to account for that?
2. We are a standalone RIA and when managing an annuity with a living benefit rider, can I charge a higher fee on the managed account IRA to compensate for no advisory fee on the annuity?
My main concern is that the IRA will be disallowed, penalized and taxed.
To illustrate #2… client has 1M in managed account paying 1% (10k). We are considering moving 500k to an annuity with GWIB. Can I adjust our fee on the 500K from 1% to 2% (still 10k) to account for no fee being charged on the annuity?
Thank you!
Permalink Submitted by Alan - IRA critic on Thu, 2020-08-27 22:59
It is a prohibited transaction for the IRA to pay the fees for any non IRA account, essentially a “self dealing” infraction. Likewise, a Roth IRA fee must be deducted from the Roth IRA or paid using outside funds to preserve the Roth. The Roth fee cannot be deducted from a non Roth IRA account. Further, any fees that are properly considered financial planning fees cannot be treated as advisory fees or IRA administrative costs.