IRA and Non Qual Wrap Fees
I understand per a private letter ruling, that wrap fees for IRA accounts can be paid with non-IRA funds without being considered an illegal contribution.
However, what about the opposite. Can IRA funds be deducted to cover wrap fees on non-IRA accounts?
My understanding was “yes”.
Permalink Submitted by Al Fry on Wed, 2007-10-03 21:17
The question is confusing, but it sounds like a distribution. I do not believe IRA assets can benefit accounts outside the IRA.
Permalink Submitted by Alan Spross on Thu, 2007-10-04 01:06
I agree.
There would have to be a reportable taxable IRA distribution, but the wrap fees may then qualify for a misc itemized deduction subject to 2% of AGI as they would if paid from other sources.
Accordingly, I think the question was whether the non IRA wrap fees could be transferred out of the IRA to the payee without being considered a distribution, and that would not be permissible.