Answer: Yes. You can pay both the professional management fees charged by your CFP and the internal fund expenses directly from your IRA without being taxed. The IRS does not count these payments as taxable withdrawals (distributions), so they do not trigger income tax or the 10% early withdrawal penalty.

Here is the breakdown of why this is allowed and how it works:

• Fund Expenses (e.g., 0.4%): These are internal costs of the mutual funds or ETFs you own. They are deducted automatically within the fund itself. You never see a withdrawal on your statement because these costs are already "baked into" the fund's daily share price.

• Management Fees (e.g., 1%): Per IRS Revenue Ruling 84-146, fees paid to an advisor or custodian for the management of your IRA are considered "administrative expenses." Because the money is used to maintain the account and never reaches your hands, the IRS does not report it as income to you.

Sources:

The Definition of "Distribution" (Pub 590-B) - Publication 590-B defines a distribution as a payment "to you" or "for your benefit." The IRS does not count an administrative expense (like a management fee) as a distribution to the owner because the money is staying within the plan's ecosystem to keep the plan running. Source: IRS.gov - Publication 590-B

Custodial Fees For Your IRA