Court Ruling on deductability of IRA fees.
Does anyone have the court ruling information that said you could deduct IRA fees in a fee based managed IRA as long as you paid the fee from outside the IRA? Terry A
Does anyone have the court ruling information that said you could deduct IRA fees in a fee based managed IRA as long as you paid the fee from outside the IRA? Terry A
Permalink Submitted by Alan Spross on Mon, 2009-07-27 20:17
These are generally referred to a WRAP accounts. The IRS letter ruling was 2005-07021, and was based on the conclusion that flat fees based on the total value of the account would not be considered commissions and payment of such fees from outside funds would not be considered a contribution to the IRA. It is generally agreed that considering the fees as an account expense also meant that the fees qualify as a misc itemized deduction subject to the 2% of AGI floor. The IRS has not questioned the listing of these fees as a misc itemized deduction.
If you have a taxable account with the same broker, the IRA wrap fees can be deducted from the taxable account. If deducted from the IRA, then no deduction is allowed.