Advisory Fees and Calc of NIA on excess IRA Contribution
Hello, Can you please clarify how I would incorporate advisory fees into the calculation of the Adjusted Closing Balance in the IRS formula for NIA when removing an excess contribution from an IRA? The info I have indicates that you would add any distributions during the period (and advisory fees were taken from the account during the period). It also says that any “applicable loss of earning penalty or fees” should be subtracted. I’m not sure if the advisory fees count as a “fee” or a “distribution” or none, or both. Thank you for your help!
Permalink Submitted by Alan - IRA critic on Thu, 2015-02-12 17:09
Not sure where that info is coming from, but IRS Reg 1.408-11 or TD 9056 makes no mention of fee deductions.The fees are not considered distributions or transfers as applied in the Reg. Therefore, the affect of a fee deduction is that the adjusted closing balance is reduced and a lower amount will be returned to the taxpayer. If there are positive earnings, the fee will reduce those earnings and therefore taxpayer tax on earnings or early withdrawal penalty will be reduced.