Finance

Can I Deduct My IRA Management Fees?

Here's a "retirement" plan strategy suggestion for you to consider, but only after discussing the deductibility aspect (as opposed to the investment aspect) with your accountant:

Can I deduct IRA management fees? - TurboTax Support https://ttlc.intuit.com/questions/1900339-can-i-deduct-ira-management-fees

"Management fees paid through the IRA account cannot be deducted. They simply reduce the value [and productivity]of your IRA. On the other hand, management fees paid by cash or check [or direct deposit] and are not deducted from the IRA, can be deducted as investment expenses." Feb 23, 2017

Research suggests that IRA management fees (perhaps all retirement account fees) are tax deductible if taken from a non-IRA account.

I'm suggesting that you (after checking with your accountant, of course) either pay your "retirement account" fees from existing personal or trust accounts, or set up new accounts to take care of these payments.

This approach allows you to grow the income better in the tax deferred accounts... where the long term goal is to produce significantly more income than the RMD will eventually demand be withdrawn.

The fee paying account will logically become a depository for the RMD as well, and become the "bank" from which your monthly spending money is withdrawn.

There's no doubt that your spendable income numbers will benefit from this "retirement ready" strategy.... particularly if you already have (or can establish) a separate portfolio large enough to produce income in excess of the fees being withdrawn.

Depending on your age and asset allocation, any "taxable" portfolio could work well in this strategy.... so long as it produces enough income to do its job... and have something left over for reinvestment. Please note that you cannot "reinvest" either gains in market value or the non-income portion of "total return".

A "sub strategy" would be to use taxable income CEFs to fund the fee payments, and a combination of tax free CEFs, equity CEFs, and Investment Grade Value Stocks for the rest of the portfolio.

Questions? Click here for answers.

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