Aggregating fees from like-type IRAs?
If it’s possible to aggregate RMDs from Traditional IRAs, taking them from as few as one IRA that have the same account owner, can one also aggregate the advisory fees deducted from them?
I have a client in his 70s (past his RBD) who may end up splitting his IRA into three: one with his wife as sole primary beneficiary and his daughters as equal contingent beneficiaries; one with a charitable entity as sole primary beneficiary; and one with a daughter as sole primary beneficiary (to compensate for a comparable amount being gifted to another daughter).
The ability to aggregate RMDs gives the client a degree of control over the eventual size of each IRA. If the charitably-destined IRA grows beyond what he wants to give, for example, he can take more of his aggregate RMD from there.
But he asked if the advisory fees for his daughter’s carved-out Traditional IRA (i.e., his IRA on which she is sole primary beneficiary) could be paid from one of the other Traditional IRAs. My first reaction was to say “no”, but that I would look into it. I can’t find anything that even mentions this possibility.
Any obscure IRC reference or IRS guidance that could shed light on this? It would not seem to be anything like the typical scenarios discussed as potential prohibited transactions (i.e., a Traditional IRA paying advisory fees for an account with a different tax regime).
Thanks
Permalink Submitted by Alan - IRA critic on Fri, 2023-03-24 23:52
It should not be a problem to aggregate the fees for like kind IRAs within those like kind IRAs. What must be avoided is paying fees for Roth IRAs or taxable accounts from a pre tax IRA. It is OK to pay any type of IRA fees from a taxable account.
Permalink Submitted by Matthew Eckman on Tue, 2023-04-04 18:41
Thanks, Alan. Is there any document, regulation, or guidance to which I can point if we need to defend this?