Paying Management Fees for a Roth IRA from a Traditional IRA
Good morning IRA Thought-Leaders,
We’re looking for supporting documentation (IRS, etc.) that either supports or prohibits the payment of management fees attributed to a Roth IRA, from a traditional IRA. In this case, the client ONLY has two accounts: Traditional IRA and a Roth IRA. Can the client pay fees attributed to his Roth with funds from his traditional IRA?
Thanks in advance for your knowledge!
Jason
Permalink Submitted by Alan - IRA critic on Mon, 2022-02-07 02:16
I can’t locate any IRS specific reference. A couple advanced analyses of fee payment structures do not even mention the possibility, probably due to lack of guidance. My opinion is that if the IRS were asked, it would not be allowable because the two IRA types have totally reversed tax rules for contributions and distributions. If the IRS were to rule for a prohibited transaction, one or both IRAs would be treated as fully distributed (disqualified) as of 1/1 of the tax year. Therefore, if anyone was going to be this aggressive, they should partition their IRAs into two accounts of each type small enough so that most of the balances would be spared the prohibited transaction penalty.