Reimburse Fees in IRAs

[Guest Penny40]

I was wondering if an IRS regulation exists giving define to how fee reimbursements apply to IRA accounts. Fee reimbursements such as: closing costs, annual fees or even previous Custodian's tranfser fees. Can the registered representative on the IRA account take these fees for their IRA clients.

Thank you

[Appleby]

There is no regulation that specifically address this issue. We rely on PLRs ( note that PLR’s cannot be cited as precedence , but gives a very indication of how the IRS views certain situations).

Ultimately, you need to refer to the IRA plan document, which should provide the custodians’ stance on fee reimbursements.

Generally, once fees have been charged to an IRA, they cannot be reimbursed. Any reimbursement must be reported as an IRA participant contribution and reported to the IRS as such.

Some fees may be paid out of pocket, prior to being charged to the IRA, these pre-payments will not be treated as IRA contributions and will not be reported to the IRS. These are usually administrative fees.

Trade related fees must be paid from the IRA – may never be paid out of pocket and cannot be reimbursed.

See PLR 8830061 attached.

[Appleby]

See also Rev Rul 86-142- attached