529 Plan Deductible Expenses
August 19th, 2010
Question: Are investment fees in tax advantaged accounts deductible as an investment expense?
I have several tax advantaged accounts, a traditional IRA, a roth IRA, and a 529 plan.
Are the various fees paid in the accounts, such as transaction fees, account maintenence fees, and even one recharacterization fee tax-deductible.
I’m inclined to think not because they tend to take all these fees from the tax advantaged account, and they don’t let you pay them specifically for the fee.
–>Adam
Answer: When the fees are paid from from the fund, you already get your tax benefit for the IRA because when you withdraw the money, there is less money to withdraw and less tax to pay.
Some IRA funds *do* let you pay the fees with external funds (mine does); these would be deductible (there was a clarification last year that these weren’t excess contributions to the IRA), but rarely make a difference to the tax bill.
The Roth IRA and the earnings on the 529 Plan are potentially tax-free amounts, so their fees wouldn’t be deductable under any circumstance.
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