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Author: piz Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121431  
Subject: This doesn't make sense Date: 11/18/1998 4:18 PM
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Anyone (especially if you're a Brown & Co. customer and you've converted, in whole or in part, a traditional IRA to a Roth) please comment:

I'm going to convert part of my IRA to a Roth. Brown charges a $25 fee to do this. I called and asked if I can pay the fee separately, without it counting as an IRA contribution. They said I couldn't, that the fee would have to come out of the existing IRA. But they also told that if I had a non-IRA account (I don't) they'd take the fee out of that instead. In other words, I can't pay the fee by check - it must be taken out of one or another account.

This doesn't make sense to me. If they're willing to take the fee out of a non-IRA account and not count it as an IRA contribution, why aren't they willing to accept a check in the same manner? I asked this, but the phone drone just reiterated that I couldn't pay the fee by check. I know other brokerages who charge a fee for Roth conversions accept payment that isn't treated as a contribution - why won't Brown? Seems to me that for tax purposes this fee should be treated the same way account maintenance fees are at brokerages who charge them - outside the IRA contribution limit.

Thanks,
Piz
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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6372 of 121431
Subject: Re: This doesn't make sense Date: 11/18/1998 8:13 PM
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[[This doesn't make sense to me. If they're willing to take the fee out of a non-IRA account and not
count it as an IRA contribution, why aren't they willing to accept a check in the same manner? I
asked this, but the phone drone just reiterated that I couldn't pay the fee by check. I know other
brokerages who charge a fee for Roth conversions accept payment that isn't treated as a
contribution - why won't Brown? Seems to me that for tax purposes this fee should be treated the
same way account maintenance fees are at brokerages who charge them - outside the IRA
contribution limit.]]

Piz...

I'm not a Brown & Co. consumer, so I can't really comment on your specific issue (other that to say that I agree with you, and it REALLY doesn't make any sense).

But fear not!!! (at least for deduction purposes)

If they send you an invoice for your custodial fees, and you can match that fee to a deduction taken from your taxable account, you should be able to claim the deduction without any problem.

So at least you've got THAT goin' for ya!!!

TMF Taxes
Roy

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Author: piz Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6383 of 121431
Subject: Re: This doesn't make sense Date: 11/19/1998 9:31 AM
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TMFTaxes wrote:
[[This doesn't make sense to me. If they're willing to take the fee out of a non-IRA account and not
count it as an IRA contribution, why aren't they willing to accept a check in the same manner? I
asked this, but the phone drone just reiterated that I couldn't pay the fee by check. I know other
brokerages who charge a fee for Roth conversions accept payment that isn't treated as a
contribution - why won't Brown? Seems to me that for tax purposes this fee should be treated the
same way account maintenance fees are at brokerages who charge them - outside the IRA
contribution limit.]]

Piz...

I'm not a Brown & Co. consumer, so I can't really comment on your specific issue (other that to say that I agree with you, and it REALLY doesn't make any sense).

But fear not!!! (at least for deduction purposes)

If they send you an invoice for your custodial fees, and you can match that fee to a deduction taken from your taxable account, you should be able to claim the deduction without any problem.

So at least you've got THAT goin' for ya!!!


That would be true if I had a taxable account with them, but I don't. What they're saying is that if I send a check to cover the Roth conversion fee, they'll record it as an IRA contribution to my traditional IRA. Whether or not I send a check, they'll take the fee out of my traditional IRA. In other words, if I send the check they'll record a total of $2025 in contributions for 1998, even though that check is specifically designated by me in writing to be solely for the purpose of covering the conversion fee. If I don't send the check I'll have contributed $2000 but because they take the fee from my account it's as if I contributed only $1975.

I just don't see how they can handle this fee any differently than they would an account maintenance fee. It's only $25, but stupid policies really bug me.

What if I send the check anyway, then when I do my taxes treat it as if it's not a contribution but an account fee. I can document my case, but Brown will wind up reporting $2025 in contributions to the IRS. I can just see the IRS dropping an anvil on my head because of this. :-P

Piz

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Author: piz Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6385 of 121431
Subject: Re: This doesn't make sense Date: 11/19/1998 2:08 PM
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I wrote:
Anyone (especially if you're a Brown & Co. customer and you've converted, in whole or in part, a traditional IRA to a Roth) please comment:

I'm going to convert part of my IRA to a Roth. Brown charges a $25 fee to do this. I called and asked if I can pay the fee separately, without it counting as an IRA contribution. They said I couldn't, that the fee would have to come out of the existing IRA. But they also told that if I had a non-IRA account (I don't) they'd take the fee out of that instead. In other words, I can't pay the fee by check - it must be taken out of one or another account.

This doesn't make sense to me. If they're willing to take the fee out of a non-IRA account and not count it as an IRA contribution, why aren't they willing to accept a check in the same manner? I asked this, but the phone drone just reiterated that I couldn't pay the fee by check. I know other brokerages who charge a fee for Roth conversions accept payment that isn't treated as a contribution - why won't Brown? Seems to me that for tax purposes this fee should be treated the same way account maintenance fees are at brokerages who charge them - outside the IRA contribution limit.


Now it makes sense. I called Brown again and made the point that there's no difference as far as the IRS is concerned if the fee comes from a taxable account I have at Brown or from a check designated that it's not a contribution but just to cover the conversion fee. The phone drone put me on hold for a while (I assume to consult with the High Muckety-Mucks) and when he came back he said that would be OK. So now I can pay the fee by check and not have it count as a contribution.

Another blow struck for common sense!

Piz

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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6392 of 121431
Subject: Re: This doesn't make sense Date: 11/19/1998 7:34 PM
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[[Now it makes sense. I called Brown again and made the point that there's no difference as far as
the IRS is concerned if the fee comes from a taxable account I have at Brown or from a check
designated that it's not a contribution but just to cover the conversion fee. The phone drone put me
on hold for a while (I assume to consult with the High Muckety-Mucks) and when he came back
he said that would be OK. So now I can pay the fee by check and not have it count as a
contribution.]]

Glad they finally saw the light...

[[ Another blow struck for common sense!]]

LOL!!!!!
It doesn't happen often, but it's real sweet when it does. But, it's almost tough to blame the brokers. The IRS has confused this issue so much that they are just trying to hang on by their fingernails.

But I'm glad to see that you got YOUR problem solved.

TMF Taxes
Roy

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Author: DowDanny Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6393 of 121431
Subject: Re: This doesn't make sense Date: 11/19/1998 7:47 PM
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[[ Another blow struck for common sense!}}

The problem is, the reason they didn't want to take a separate check is that they didn't want to BOTHER because that would be an unadvertised service... which is something B & Co. is notorious, er I mean, famous for NOT providing.

Still, I'm glad you insisted and I'm glad you got what you wanted. It was never a question of taxes. It was a question of "fees" and costs (to the provider).

-DD

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Author: slwjpw Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6417 of 121431
Subject: Re: This doesn't make sense Date: 11/20/1998 10:23 PM
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I learned something new Thankk You

Thanks for the contribution.

Phil

.02 for SOS

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