Financial Planning Fees taken from IRA accounts
I charge clients an asset based fee for the assets I manage. It is a percentage of the balance, and each account is charged it’s respective fee based on the balance of that account.
In addition, for some clients, I charge a financial planning fee for additional planning services.
Is it permissible to deduct that financial planning fee from the IRA?
The IRS seems to say you can deduct financial planning fees from a QRP (Qualified Retirement Plan) but I think they define that as a 401k or similar.
Permalink Submitted by Alan - IRA critic on Wed, 2023-03-08 15:28
You can deduct the investment advisory fees as you have been doing (AUM), pro rating them by account balance, or in some cases (eg Roth IRAs) billing that share to the taxable account. But additional fees such as estate planning fees or other fees not directly related to the investments selected for the accounts as described in Sec 212 (Expenses for the production of income) are not eligible. Reasonable tax planning fees are included in Sec 212. If client has a Roth IRA, it will be generally be better for client to bill the Roth IRA portion to the taxable account since client is always permitted to pay IRA fees from outside funds, but not vice versa.