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Author: darbyeye Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121440  
Subject: Tax on IRAaccount fees? Date: 8/23/2000 1:04 AM
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I am currently paying Vanguard account maintenance/custodial fees out of my IRA account balance. I realize that this may be eroding earnings to a small extent. A greater concern regards the tax liability in doing so. When Vanguard subtracts its $10, it appears to "sell" a fraction of a share from the account's share balance to do so. Am I subjected to immediate capital gains on the sold share(s), or is it taxed later? Is it never taxed because it was used to pay an investing cost? Should I have claimed it somewhere on last year's taxes? Although this relates to an essentially neglible amount, I would like find an answer now while only 3 years into the life of the IRA. Any Foolish advice would be welcomed.
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Author: TMFExRO Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 39010 of 121440
Subject: Re: Tax on IRAaccount fees? Date: 8/23/2000 3:17 AM
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I am currently paying Vanguard account maintenance/custodial fees out of my IRA account balance. I realize that this may be eroding earnings to a small extent. A greater concern regards the tax liability in doing so. When Vanguard subtracts its $10, it appears to "sell" a fraction of a share from the account's share balance to do so. Am I subjected to immediate capital gains on the sold share(s), or is it taxed later? Is it never taxed because it was used to pay an investing cost? Should I have claimed it somewhere on last year's taxes? Although this relates to an essentially neglible amount, I would like find an answer now while only 3 years into the life of the IRA.

You might want to do a little brushup reading in the FAQ. There you will learn that nothing happening under the IRA umbrella affects your current taxes. You pay when you withdraw, period.

You should consider paying your maintenance fees from non-IRA funds. These fees, unlike broker's commissions, do not count against your $2,000 annual contiribution limit. Also, if you pay them from taxable funds, they are a miscellaneous itemized deduction on Schedule A, subject to the 2% of AGI exclusion.

TMF ExRO
Phil Marti

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Author: darbyeye Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 39122 of 121440
Subject: Re: Tax on IRAaccount fees? Date: 8/25/2000 3:23 PM
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TMFExRO
Thanx for your insight, I'll do my homework at the Fool.
Darbyeye

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