I would like to hear some commentary about this. Certain websites that I have visited seem to say that “wrap” advisory fees attributable to a Traditional IRA can be paid from that Traditional IRA’s assets, without being considered a taxable distribution. The site went on to say that “all” of one’s IRA’s wrap fees, such as SEPs, SIMPLEs, and Traditionals would be allowed to be commingled and taken out of one or many of those IRAs. It did not go on to say whether or not that same taxpayer’s Roth IRA wrap/advisory fee could also be taken from one or many of that own taxpayer’s other IRA accounts without being taxable. Can someone please clarify if a taxpayer’s Roth IRA fee can be taken from their Traditional IRA?

In practice, I have seen this done this before, and the IRS never finds out because a 1099 is never issued by the TIRA custodian. In practice, can anyone cite an example where the IRS has/would find this out in order to be able to question it?

Follow-up question. Let’s pretend you have a $100,000 Roth IRA and a $100,000 TIRA under management at 1% advisory fee. If you instead charge deduct a 2% advisory fee from the TIRA, and a 0% advisory fee from the Roth, what would the difference be? Clearly it would be more favorable to the client (at the margin), but would the client actually suffer with the IRS at some point, assuming no 1099 were issued because there was no distribution?

Thank you