Is there any reason for tracking cost basis in a Roth IRA?

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Helium
Posts: 34
Joined: Sat May 15, 2021 9:06 pm

Is there any reason for tracking cost basis in a Roth IRA?

Post by Helium »

Originally my Roth IRA only contained mutual funds. All my VTSAX shares just said "noncovered shares" and didn't track anything.

I recently converted them to VTI and I just noticed that cost basis for every ETF share suddenly appeared. Is there any reason for tracking cost basis in your Roth IRA or is it completely irrelevant?
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JamesSFO
Posts: 3404
Joined: Thu Apr 26, 2012 10:16 pm

Re: Is there any reason for tracking cost basis in a Roth IRA?

Post by JamesSFO »

So there are certain things you need to track for form 8606 each year (contributions which may loosely correspond to basis depending on how much you rebalance).

I track it because I do like to understand how my investments are performing not on a daily level but just across time and knowing the cost basis helps.
MrJedi
Posts: 3540
Joined: Wed May 06, 2020 11:42 am

Re: Is there any reason for tracking cost basis in a Roth IRA?

Post by MrJedi »

Cost basis, no. There are no capital gains in an IRA. Any tracking would only be for your information and irrelevant for taxes.

Tax basis from contributions and conversions, yes. That is separate from what you are asking though, just wanted to mention it.
rkhusky
Posts: 17764
Joined: Thu Aug 18, 2011 8:09 pm

Re: Is there any reason for tracking cost basis in a Roth IRA?

Post by rkhusky »

Helium wrote: Tue Jan 25, 2022 4:10 am Originally my Roth IRA only contained mutual funds. All my VTSAX shares just said "noncovered shares" and didn't track anything.

I recently converted them to VTI and I just noticed that cost basis for every ETF share suddenly appeared. Is there any reason for tracking cost basis in your Roth IRA or is it completely irrelevant?
You can withdraw contributions (basis) any time without tax or penalty. The same is not true for earnings. If you want to withdraw before age 59.5 (and/or don't meet the 5 year rules), then you would want to know how much you've contributed.
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