Fees and Commissions
L1: Fees and CommissionsAre custodian fees and brokerage commissions that come directly out of an account considered part of the Sepp distributions? For example, if you’re drawing out $30,000 annually and $900.00 is taken directly outof your account for fees, for IRS purposes haveyou received distributions of $30,000 or $30,900?2009-05-27 15:51, By: Jimbo, IP: [220.127.116.11]
L2: Fees and CommissionsCommissions as well as advisory fees and custodian fees are NOT considered “distributions.” These fees are considered “operating costs” for you IRA.
You don’t have to report these fees as income and you DON’T get to deduct them as expenses.
Jim2009-05-27 16:42, By: Jim, IP: [18.104.22.168]
L2: Fees and CommissionsHello Jimbo:
The the $900 in fees are separate & distinct from the $30,000 to you and are permissible.
2009-05-27 16:43, By: TheBadger, IP: [22.214.171.124]
L3: Fees and CommissionsIf these are wrap fees, you also have the option of preserving your IRA balance by having the fee billed to you and paid separately from after tax funds. This payment would then be a potential misc itemized deduction. An IRS ruling clarified that this payment is NOT considered a contribution to your IRA.
The best decision may hinge on whether your $30,000 is providing you more than you need or whether you are just getting by, as well as whether you could save tax dollars by itemizing.2009-05-27 19:58, By: Alan S., IP: [126.96.36.199]
L4: Fees and CommissionsMany taxpayers, and tax practitioners, think that there is an advantage to paying the IRA fees with non-IRA funds. This is usually incorrect because of the 2% threshold for deduction of Miscellaneous Itemized Dedductions. In addition, if these fees are paid from the IRA account, the taxpayer will usually save 25% or more ultimately because all IRA distributions are taxable as ordinary income eventually, rather than possibly not even getting a deduction currently.2009-05-28 16:37, By: dlzallestaxes, IP: [188.8.131.52]
L5: Fees and CommissionsThanks to all.
I like the “paid directly from the IRA” concept and the additional point thatdlz makes, that the fees, if paid directly from IRA are paid withtax free dollars.2009-05-28 18:41, By: Jimbo, IP: [184.108.40.206]