In response to a comment that the current effective date of the new rules on fiduciary fees does not give fiduciaries enough time to implement them, the IRS amended T.D. 9664 to delay the date. As a result, the new rules governing which costs of trusts and estates are subject to the 2% floor on miscellaneous deductions now apply to tax years beginning after Dec. 31, 2014, rather than to tax years beginning on or after May 9, 2014 (79 Fed. Reg. 41,636 (July 17, 2014)).
Under the final regulations, the portion of a
bundled fiduciary fee attributable to investment advice
(including any related services that would be provided to any
individual investor as part of an investment advisory fee)
will be subject to the 2% floor. Bundled fees are fees that
are billed together, where a portion is fully deductible and
another is subject to the 2% floor. (For coverage of the new
fiduciary fee rules, see “Final
fees on fiduciary fees are issued.”)
Under
the original effective date, fiduciaries of existing trusts
and calendar-year estates would have been subject to the rules
beginning Jan. 1, 2015. However, the commenter pointed out
that the rules would apply immediately to any nongrantor trust
created after May 8, 2014, as well as to the estate of any
decedent who dies after May 8, 2014, and any existing fiscal
year estate with a tax year beginning after May 8, 2014. The
commenter was especially concerned that the immediate
effective date would not give fiduciaries enough time to
implement the program changes necessary to unbundle the
portion of a fee that was subject to the 2% floor from the
portion that was not. Under the new effective date, no
taxpayer will be subject to the rules until tax years that
begin on or after 2015, which should give fiduciaries time to
implement any necessary changes.
