[aksardar]

I have rolled over 401K to IRA account whenever I switched jobs. They sent me a check in the name of my brokerage firm and deposited into my IRA account. I kept some previous 401K statements, but not all. On my IRA statement provided by my brokerage firm, cost basis is unavailable, obviously. Does this become a problem when I withdraw money from IRA at the time of retirement because I won't know what the gain is? Do I need to obtain the cost basis for all 401K rollovers from the 401K managing firms such as Fidelity from my previous jobs?

[ebaines]

Not a problem. Cost basis really isn't a concern with either 401(k)'s or IRAs, as any buying/selling between investments in the plan is tax-free. Later at retirement when you make withdrawals the full amont of withdrawals will be taxed as ordinary income (not as capital gains). However, if any of your 401(k) was funded with after-tax money, then the plan administartor should have passed that information on to the custodian of your rollover IRA. After-tax contributions to 401(k) plans are rare, but they can happen. If this is the case, then when you take withdrawals the portion that is attributable to your original after-tax contributions is tax-free (since you already paid tax on that part). So that is one piece of data that you do want to track.

[KISS]

My understanding is that banks and investment firms don't keep track of an IRA Basis. I think they think they don't have to.

As I understand it, gan or loss can only be used on you LAST withdrawal from all of your IRA's. That rarely happens because may die before you use all the money in the IRA.

As I said, I understand it to be the very last withdrawal of all of your IRA'a. Can you claim a loss or a gain. I think it's publication 590.

[ebaines]

.

As I understand it, gan or loss can only be used on you LAST withdrawal from all of your IRA's. That rarely happens because may die before you use all the money in the IRA.

As I said, I understand it to be the very last withdrawal of all of your IRA'a. can you claim a loss or a gain. I think it's publication 590.

Interesting point - this issue rarely comes up, although with the way the stock market has behaved in the past two years it may become more of an issue. But to be clear, you're talking about traditional IRAs, not rollovers from a 401(k) as the OP had asked, and only losses are subject to this special treatment. You're right - it is in Pub 509. When making withdrawals if after the entire account is depleted the total amount of distributions is less than your after-tax contributions, (non-deductible contributions to the IRA), then the "loss" is considered a personal loss and deducted as a misc deduction on Schedule A, but only to the extent that the loss exceeds 2% of AGI. So again, it can pay to keep a record of your after-tax contributions to both 401(k)'s as well as IRAs.

[KISS]

It's a very confusing entity, for sure. Shouldn't a rollover to a traditional IRA maintain the cash basis from the 401K at the time of the rollover?

As the new IRA has it's ups and downs, then the CB should be continued.

And again, I thought it applied to our very last withdrawal, e.g when all of your IRA's have been depleated.

This is what makes it very, very confusing.

I have to keep track of a bunch of investment accounts myself because I started investing 6 months before they started keeping track for me. You can't just "re-characterize" so to speak to get everything back in line. These are multiple accounts fro 1986. Not IRA's. That is a LOT of work.

I have a few IRA's and they just don't do "Cash basis".

As I said, I'm confused if it's by account basis and not after depletion of your IRA's.

[ebaines]

Again, very few 401(k) plans have a basis at all - only if you invested using after-tax money. So this issue would affect only a small portion of 401(k) investors, and again only if the account loses so much in value that once all withdrawals are taken and the acount totally depleted, the sum of all withdrawals were less than your after-tax contributions. And yes, it applies only at the final withdrawal because only then would you know what the sum of all withdrawals is.

I too have investments from an old company savings plan that in the mid-80's was changed to a 401(k), and then later I rolled that account to a rollover IRA, and through all that the custodians have kept track of the relatively small piece that was my after-tax contributions.