Federal Income Tax Treatment of Investment Advisory Fee Withdrawals?

[Guest rrocket61]

Are withdrawals from 401(k)s to pay for Investment Advisor Fees on that account considered taxable income and subject to any 10% early withdrawal penalty?

[Jon Chambers]

Are the withdrawals only used to pay fees for the 401(k)account, and are they paid directly to the advisor? If so, I'd assume that they are plan expenses, and that there is no taxable event to the participant. Of course, the fee wouuld not be a deductible investment expense for the participant, since the fee comes from a tax-deferred source. If the withdrawal is used to pay fees on other accounts, or if the participant accepts the funds and then pays them to the advisor, you might reach a different conclusion.