Richard Cline wrote:
- quote -

Richard,
It may not work out as a wash for you. That fee is deductible only as a
miscellaneous itemized deduction, and that category of deductions has a
2% floor - you can only deduct the amount exceeding 2% of your adjusted
gross income. And of course, can deduct them only if you itemize deductions.

So unless you itemize, and you have other misc. itemized deductions that
already take you over the 2% floor, a portion of the deduction for IRA
fees paid with post-tax dollars is "lost" each year. For many people
this means management fees aren't deductible at all. In that case it
wouldn't be a wash, as compared to simply debiting (pretax) fees from
the IRA directly. Fee debits aren't considered distributions, and never
show up as taxable income...in a sense you might say that makes them
100% deductible.

It gets down to specifics of the division of your assets between IRA and
non-IRA accounts, and the deductibility of the fee on Schedule A. But in
general it seems the bigger the IRA, the more likely the client will
debit directly from it. If only to help "use it up" without triggering
taxes from distributions. In those cases AGI is typically higher, so
2%-of-AGI is higher, and less of the fee would be deductible.

-Tad

I am wondering if there is any difference between having portfolio
management fees paid directly from my IRA of paid outside the IRA.

First, I am past 70 and living mostly on IR assetts.

If I take money out of the IRA to pay for portfolio management fees it
increases my taxable income. But that money is a deductable expense so
it looks like a wash for tax purposes.

If the fees are taken directly from inside the IRA it makes a little
less paperwork but the dollar effect appears to be the same.

Correct me if there is more to the issue.

Dick