I pay an advisor fee equal to a percentage of my accounts value. I have a taxable account, a Roth IRA and a regular IRA all with the same financial advisor. I am billed separately for the management fee for each account. I paid the advisor fees for the Roth and taxable account from the taxable account. (I paid the advisor fee for the regular IRA account from that account, and I am not deducting those fees.) Since the ROTH IRA is not producing taxable income, is the advisor fee for that account still deductible?
The IRS rules state: "You can deduct
fees you pay for counsel and advice about
investments that produce taxable income. This
includes amounts you pay for investment advisory
services." As you point out, distributions from your Roth IRA will not be taxable income, so the advisory fee is not deductible.