I am considering transferring an IRA to an account that will be actively managed by a financial advisor. The advisor charges a fee that is a percentage of assets and can be paid by check or by taking the fee out of the account. If I elect to have the fee taken out of the account, is this a taxable event (i.e. am I actually withdrawing funds from the IRA to pay the fee)? Or is just like a fee (non taxable)on a mutual fund?

Management fees deducted from your IRA are not treated as distributions and therefore are not taxable.

If you have the option and can afford to ( and the fees are significant) you may want to consider paying these fees out-of-pocket, as the fees will reduce your IRA balance, negatively impact the tax-deferred growth ( or tax-free for Roth IRAs) of your assets. Further, you may be able to deduct the fees paid out of pocket (excluding sales charge and commissions) under IRC Sec. 212