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Can You Deduct Investment Advisory Fees Directly from an Annuity?
Michael Kitces in Nerd's Eye View [Guidance Overview] Aug. 29, 2013 "[P]aying investment management fees directly from an IRA on a pre-tax basis, without having the amounts treated as a taxable distribution, is legitimate.... In the case of annuities, however, the situation is less straightforward ... So what would happen if the investment advisor tried to get paid directly from the annuity anyway? The annuity company would issue a Form 1099-R to classify the payment as a taxable distribution on behalf of the annuity owner.... The subsequent payment of those funds to the investment advisor would then likely be deducted as a miscellaneous itemized deduction subject to the 2%-of-AGI floor ... and the miscellaneous deduction would hopefully offset the amount of income just reported on the Form 1099-R. Unfortunately, in reality the amounts probably will not offset[.]" |
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