Deduct Management Fees paid from a Roth?
Hello, everyone! I have an interesting question that’s been going around our office.
We know that you can deduct investment management fees paid from a taxable account. You can also pay investment management fees from a tax-deferred IRA, but they won’t be deductible.
Our question is what happens if the investment advisory fees come from a Roth IRA? Can you deduct them since the Roth consists of after-tax dollars? Or are they non-deductible, as the growth is tax-free?
What about custodial fees paid from a Roth (for things like custody of an account, holding an alternative investment, etc.)? Are they deductible as well?
Is there an IRS publication on the answer for verification?
Thanks for the answers!
Permalink Submitted by Alan - IRA critic on Fri, 2016-01-22 23:37
Any fee deducted from any kind of IRA is not deductible. But you might be able to get the fee billed separately. If paid with taxable funds, it will preserve the IRA value, but I do not know if the IRS has clarified the question of the Roth not generating taxable income with respect to the deduction of Roth management fees billed outside the Roth. Related IRS Pubs do not clarify this question. The 2% AGI misc deduction floor or lack of ability to itemize makes this question moot for many people, but certainly not all.