Were you referring to the 72t option for an IRA? I know about that. If not, what is incorrect about what I wrote? I'm not going to simply accept what you wrote because "you said so." No source or link? Your tone was a little insulting.
I am telling you from experience, because I have some managed accounts. All fees are taken out of my accounts, even the tax deferred ones. It's pretax money in the tax deferred accounts. It is not considered a distribution.
I don't know if all brokerages are required to offer it, but some brokerages will bill fees separately. I imagine some brokerages don't want to add billing and collection activities that don't produce any revenue.
And no, I am not talking about 72T.
You asked for a reference, so here is one:
The Rap On Wrap Fees For Retirement Accounts
Just beneath Table 1:
"If you nevertheless decide to pay wrap fees from your account balance, remember these payments are not treated as distributions and are therefore not added to your income. As such, be sure not to include these payments on your tax return."
There are lots of other references available but I won't bother with them.
You don't have to take my word for it, though, and you don't have to believe the internet or these forums. I would encourage you to call a brokerage that hosts managed accounts and ask them.
Are there some really bad money managers and wrap plans? There sure are. Our portfolio returned 8.9% net last year -- over five years of withdrawals for us at our current rate. Did it beat the S&P? No, and it is not supposed to, but it is working for us. Are they right for everybody? No. Could I do it all myself? Yes, I could. But it's my money and I get to choose. Everybody else gets to choose, also. Isn't that great?
Now I'm not picking on you individually, Scrabbler. Many posters here will take every opportunity to poo-poo managed accounts and money managers. Sometimes those posters are not so well informed.
I simply do not know why this topic becomes so heated so fast. There are a lot of people in the world doing things much worse than financial people managing other people's money for a fee.
From:
http://www.early-retirement.org/forums/misc.php?do=sknetwork&page=rules
"Excessive sarcasm, extreme belligerence, insults, profanity, extreme anger, offensive comments about race, gender, sexual orientation, religion, and national origin, are not acceptable."
This question is not directed toward you, Scrabbler, but perhaps someone will answer it, or we can just file it under rhetoric: Where are these rules when there is a "Let's All Flame The FA" thread?