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Hildegard
New Member

Our retirement investments are managed by Bank of Ann Arbor. They take .5% of our earnings directly out of the account. Does this qualify as investment interest expense?

My husband took his first withdrawals from this TIAA account in 2017 ($12,000 total). Our total account value is over $1.5 M, so the annual fee is roughly $7500. It is taken directly from our account, but we get statements showing the amount.

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Coleen3
Intuit Alumni

Our retirement investments are managed by Bank of Ann Arbor. They take .5% of our earnings directly out of the account. Does this qualify as investment interest expense?

Not as an investment interest expense, but possibly as an investment expense.

Here’s a list of investment-related expenses that you may be able to deduct:

  • Fees for investment counsel and advice, including subscriptions to financial publications
  • IRA or Keogh custodial fees, if paid by cash outside the account
  • Software or online services used to manage your investments
  • Safe deposit box rent, if used the box to store certificates or investment-related documents
  • Transportation to your broker’s or investment adviser’s office
  • Attorney, accounting or clerical costs necessary to produce or collect taxable income
  • Charges for automatic investment services and dividend reinvestment plans
  • Costs to replace lost security certificates

Investment-related expenses that can't be deducted include:

  • Trading commissions—these are "capitalized" to increase your cost basis and/or reduce your taxable sales proceeds
  • Costs of traveling to attend a shareholder’s meeting
  • Investment advisory fees related to tax-exempt income—you generally need to prorate these fees based on the portion of tax-exempt investment income versus total taxable investment

Miscellaneous itemized deductions are generally limited to the amount of expenses over and above 2% of your adjusted gross income (AGI). In other words, there’s a floor below which you lose the ability to deduct.

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