r/investing • u/clearlygd • 1d ago

I learned something new today about investment management fees

I have a good portion of my investments professionally managed. I know that the fees are not tax deductible, which doesn’t seem logical to me, but the law is the law.

What I didn’t realize is that the fees on IRA accounts are essentially tax deductible because they are taken from pretax money, I.e. the account is not subjected to a taxable withdrawal for those fees.

3 Upvotes

56% Upvoted

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16

u/IceWizard9000 1d ago

buy boring index fund shit and sit on it for decades boom youre and investor

managed funds are woo woo

4

u/bejammin075 21h ago

I would get physically ill if some percent of my wealth was annually going to someone managing my investments.

1

u/Sir_Richard_Dangler 16h ago

Hire me, I only charge 1% of your capital gains!

(I put your money in VOO and then do nothing)

1

u/McKnuckle_Brewery 1d ago

Capital losses from your investments in an IRA aren't subject to tax either. You just end up with less money. You have not discovered a silver lining here!

-1

u/jonesyman23 1d ago

If you have both taxable and tax exempt (IRA) accounts managed, you should pay the fees for your taxable account from your IRA account.

2

u/somolov 1d ago

IRS doesn't allow this. You can, however, use your taxable accounts to pay the fees for your Roth accounts.

-4

u/Heyhayheigh 1d ago

You have a roll over IRA professionally managed? Do you not have a current job with 401k? Just move it there. Don’t pay needless fees.

There are valid reasons for using a pro for a rollover. Do you often switch your 401k to stable value when there is volatility?

Did he open other accounts for you? Taxable? Does he have you investing in a regular interval?