Here's some good retirement planning news. The Internal Revenue Service decided last month that money paid to a financial adviser for managing your IRA doesn't have to be subtracted from your annual IRA contributions limit.
The IRS says that if you're paying a fee calculated as a percentage of the assets your adviser manages, then you can pay the fee separately from non-IRA funds. It doesn't have to reduce your retirement account.
On the other hand, if you're paying your adviser commissions based on the amount of trades, then you have to subtract these payments from the total in your account.
This is one more argument for using a fee-based adviser instead of a commission-based adviser to manage your retirement funds.
If you have a healthy IRA, the distinction between these two payment methods could make a big difference. For instance, a 1.5 percent management fee on a $1 million IRA is $15,000 that you can pay out of other money, and leave the IRA growing tax-free. On top of that, Ed Slott, editor of the newsletter Ed Slott's IRA Advisor, says potentially, you can deduct that $15,000 in fees as a miscellaneous expense on your income tax -- as long as it is more than 2 percent of your income.
A winning strategy all around.