Cost basis for stocks transferred out of IRA
I have a brokerage account with many individual stocks with losses. When transferring stock from the IRA to a reguler brokerage, two firms tracked the cost basis and buy dates orignal to the purchase. The new brokerage refuses to do so. This means that as a result of the 2007 collapse whatever benefit I had to tax free growth was wiped out and I cannot take advantage of losses incurred in the sale of the stock. I would have been better off without the IRA. My past information from my advisor was that if I transferred the stock, I could take the loss. What is your opinion
Permalink Submitted by Alan Spross on Mon, 2012-03-26 18:50
The cost basis of securities transferred out of a retirement plan is their value on the date of the transfer. That would be reflected in the 1099R amount, although a breakdown would be needed if more than one security was transferred out of the IRA. Losses within the IRA just means that there is a lower amount to tax when distributions are taken from the IRA.
A brokerage firm now required to track the cost basis of securities they hold for reporting purposes should be using the value of the shares when distributed from the IRA, but there might be a small difference in the cost basis when distributed vrs the value when received by the IRA custodian. Even a couple minutes can result in price changes when the markets are open. The brokerage should take your word for the cost basis per share upon distribution from the IRA for purposes of IRS required basis reporting when you sell the shares.