A while ago, I submitted a post to the Discussion Forum regarding the need to keep track of the basis of individual securities in IRAs. It was as follows:
Is it ever necessary for tax purposes to keep track of the basis of individual securities (e.g. stocks, ETFs, mutual funds) in traditional (deductible or non-deductible), roth, or inherited IRAs? I understand that IRAs can have basis at the account level (tracked, for example, on Form 8606), but I'm talking about the individual security level, not the account level. Thank you.
I received the following response:
NO, THERE ARE NO TAX RELATED
Permalink Submitted by Alan-iracritic@... on Thu, 2019-08-15 14:04
No, there are no tax related reasons to track individual securities basis in an IRA. Many brokerages will provide this info in the same manner they do for taxable accounts, but the only purpose is for determining if the investment has performed well for you, not for any tax reasons. Even if you distribute a security as an in kind distribution to your taxable account, the basis of that security for purposes of later sale in the taxable account is the value on the date of distribution from the IRA. What you paid for it when purchased in the IRA is irrelevant.
I want to thank Alan-iracritic for this excellent and accurate response.
I have one follow up question:
Is it ever necessary for tax purposes to keep track of the basis of individual securities (e.g. stocks, company stocks, ETFs, mutual funds) in 401ks, 457s, or other employer sponsored retirement plans? Thank you.