topic I took a distribution from my traditional IRA to pay its management fee. How do I file to avoid the distribution tax? in Retirement tax questions

I took a distribution from my traditional IRA to pay its management fee. How do I file to avoid the distribution tax?

dbooksta — Sat, 11 Apr 2020 20:44:10 GMT

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?

Re: I took a distribution from my traditional IRA to pay its management fee. How do I file to avoid the distribution tax?

dmertz — Sat, 11 Apr 2020 22:16:09 GMT

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.

Re: I took a distribution from my traditional IRA to pay its management fee. How do I file to avo...

KarenM90 — Sat, 11 Apr 2020 23:01:09 GMT

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.