Can my IRA custodian pull fees for my taxable accounts from my IRA? Or can I only pull fees that are applicable to my IRA from my IRA?

[Lisa995]

If you pull money out of your IRA (for whatever reason) it will be taxable income to you.

[macuser_22]

Are you asking about IRA management fees?

That depends on the terms of the IRA agreement with the financial institution.  Review the agreement fine print or ask the IRA custodian.

[celestep]

I'm referring to investment advisory fees.  Say i have 4 accounts at Schwab - 1 IRA and three taxable accounts.  My question is is it permissible to aggregate the total fee due on all 4 accounts and have that pulled from IRA?

[Lisa995]

Only the IRA fees can be paid from the IRA without it becoming income to you.  I don't have a cite, its just how retirement accounts work.

[fanfare]

why would you want to do that?
maintenance fees paid by the tax-deferred account are not deductible.
maintenance fees paid by you, from a regular account, are deductible subject to limitation
not to mention you are depleting your tax-deferred funds.
P.S. a Maintenance fee can be paid from your tax-deferred account and is not considered a distribution.

[Lisa995]

They took away the Investment fees deduction with the Misc Itemized Deductions for 2018, didn't they?

[Anita01]

Even if the fiduciary allows you to pay fees for other taxable accounts from your IRS, those fees would count as a taxable distribution from your IRA.  

[celestep]

Thanks - can you provide me with some sort of cite for that rule?  Treasury Reg or otherwise?

[Anita01]

Please see this well-written article on Section 212 expenses
<a rel="nofollow" target="_blank" href="https://www.kitces.com/blog/irs-rules-for-paying-investment-fees-from-taxable-and-retirement-account...>

[Anita01]

Also Chapter 3 here:
<a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/p550.pdf">https://www.irs.gov/pub/irs-pdf/p550.pdf</a>

[celestep]

Thanks - I've seen that article, but it is 5 years old and I was looking for a definitive source - like the IRS or treasury regs.  Publication 550 specifically says it does not apply to IRAs (see the into) and Pub 590A & B don't include any info regarding the payment of fees, so I'm at a loss as to where this rule "lives."  I'm not concerned with the deductibility rules, but more concerned about fees for other non-IRA accounts being deducted from IRAs.  Thanks for all the help though!!  I appreciate it.

[macuser_22]

What rule are you referring to?

You can take money out of your IRA anytime you want and use it for any purpose including paying for financial advice.  It will be taxable the same way as any other distribution.   There is no regulation that treats fees for investment advice any different than any other IRA distribution, it simply does not exist.   IRS Pub 590B tells you how IRA distribution are treated.

[TomD8]

If I were you I would immediately instruct your IRA custodian NOT to use funds from your IRA to pay fees on any taxable account.  That's because, if done improperly this could cause taxes, penalties, and perhaps a “prohibited transaction,” which can lead to seriously negative consequences.  Fees should be paid from the account generating the fee.  This web reference gives a good discussion on this topic:  <a rel="nofollow" target="_blank" href="https://www.scottkays.com/article/2013/08/28/how-should-you-pay-investment-management-fees">https://...>

[celestep]

Thanks - yes, I've seen that article as well.  That's my concern - that it WILL be treated as a distribution.  Fees for management of the IRA itself can be deducted and will NOT be considered a distribution.   I have seen that article and the treasury reg cite he uses for this point is no longer valid.  I am looking for the regulation(s)  that specifically says that if the custodian deducts investment management fees that are not related to the IRA, it will be deemed a distribution.  Thanks though!