Billing TIRA for 401(k) Management
Generally, advisory fees for non-TIRA accounts being billed to TIRA are a big no-no. I do believe it is Ok for client’s TIRA #1 to be billed for client’s TIRA #2. As an extension of that… could client’s managed TIRA be billed for management of client’s 401(k), assuming the 401(k) is all pre-tax, non-Roth? It seems the taxpayer would be in the same position here as with the 2 TIRA example.
Permalink Submitted by Alan - IRA critic on Tue, 2021-06-01 16:34
Fees for all IRAs could be billed to a single IRA, but billing an IRA for fees for managing a non IRA account including a 401k or a personal account would be a prohibited transaction with costly repercussions.
The fee for advising on the 401k should either be billed to the 401k itself (usually inconvenient and payment could be declined) or to the participant individually (convenient but not paid with pre tax dollars), so it is obvious why the an advisor would be tempted to bill the IRA for non IRA generated fees.
Note that there are no instances where an IRA plan can be aggregated with a 401k for any purpose from RMDs to discrimination testing to applying plan basis.