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I took a distribution from my traditional IRA to pay the account management/advisory fee. Distributions for that purpose are not supposed to be taxed.
In TurboTax, how do I indicate this so that it is not considered a taxable distribution?
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Unfortunately, this is a taxable distribution. It's only nontaxable if the IRA custodian takes the fee for management of the IRA directly from the account and does not issue a Form 1099-R. The fact that you received a Form 1099-R indicates that you yourself took a distribution to pay the fee outside of the IRA, and the fact that the money was used to pay a management fee is irrelevant to taxability of the distribution.
Yes, dmertz is correct. You can pay investment management fees or financial planning fees that are structured as a percentage of assets directly out of the account being managed.
It’s not considered a withdrawal from an IRA account when fees are paid this way.
Generally, once the funds are distributed to you, they can be considered taxable.
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