Can i deduct a penalty charged because I rolled over my traditional ira before it matured to a new traditional ira in order to get a better interest % rate?

[--working4free--]

I just want to know if I can deduct the penalty I was charged for rolling over my traditional IRA before it matured to another traditional IRA to get a better interest rate. 

[Vanessa · Accepted solution]

No, penalties are not deductible. 

[dmertz]

Only an early-withdrawal penalty reported in box 2 of Form 1099-INT is deductible.  An early-distribution penalty on an investment within an IRA is not reported on Form 1099-INT because the investment in the IRA is owned by the IRA, a tax-exempt entity, not by you personally.