Advisory Fees on Held-Away Assets
I am a CFP(R), managing an IRA and a 403b for a client. She does not have a taxable account and does not manage her spending well, so cash flow is an issue.
We charge an annual fee of 1% of the assets under management (AUM), but she has fallen into arrears on paying the fees for managing her 403b (although she still wants us to manage it). We take fees directly from her IRA for the costs related to managing her IRA. The client has asked if we can also take the fees from the IRA for the cost of managing her 403b. Since they are both tax deferred, it seems reasonable, but I can’t find anything that directly says this is allowed. Can anyone advise us on the legality of taking the fee for the 403b management out of the tax deferred IRA account?
Thanks!
Permalink Submitted by Alan Spross on Tue, 2012-10-16 18:23
Fees for IRA accounts can be aggregated between the IRAs.
I cannot document it, but I do not believe that fees for other than the IRA account can be deducted from the IRA, or from any qualified retirement plan other than the one generating the fees. Of course, any of these fees can be deducted from a taxable account, but she does not have one.
I looked at a couple advisor agreements with firms such as Fidelity, and they appear to support the above, although they do not directly contain a specific exclusion with respect to fees from other plans.