Accountant Forums


Reply
Thread Tools

cost basis in retirement account

 
 
bobmoneyquestion
Guest
Posts: n/a
Thanked:
 
      04-28-2006, 10:59 PM
When calculating my cost basis for a mutual fund in a roth-ira, money
includes any reinvested dividends and capital gains to the cost basis thus
when generating returns that are not right.

because roth accounts are pretaxed any dividends or capital gains are not
taxed and should not be added to the cost basis.

i've gone into the account settings and checked that this account is a
retirement account and a roth-ira.

any suggestions on how to fix this so i can determine what my actual returns
are?
--
bob
 
Reply With Quote
 
 
 
 
Cal Learner-- MVP
Guest
Posts: n/a
Thanked:
 
      04-28-2006, 11:14 PM
In microsoft.public.money, bobmoneyquestion wrote:

>When calculating my cost basis for a mutual fund in a roth-ira, money
>includes any reinvested dividends and capital gains to the cost basis thus
>when generating returns that are not right.
>
>because roth accounts are pretaxed any dividends or capital gains are not
>taxed and should not be added to the cost basis.


That is a non-sequitur.

>
>i've gone into the account settings and checked that this account is a
>retirement account and a roth-ira.
>
>any suggestions on how to fix this so i can determine what my actual returns
>are?


I could try to explain why shares bought with dividends are
logically part of the basis. From a tax point of view, can we at
least agree that the "basis" of the shares is moot?
 
Reply With Quote
 
 
 
 
arthur
Guest
Posts: n/a
Thanked:
 
      04-29-2006, 12:38 AM
How's this:

I have $1000 in my left pocket.
I receive $1000 dividend and put it in the right pocket.
I buy $1000 worth of addition (new) shares.

Does it make any difference, and to whom, from which pocket I paid for
the new shares?

arthur
==

On Fri, 28 Apr 2006 18:14:46 -0500, Cal Learner-- MVP
<(E-Mail Removed)> wrote:
>
>I could try to explain why shares bought with dividends are
>logically part of the basis. From a tax point of view, can we at
>least agree that the "basis" of the shares is moot?

 
Reply With Quote
 
ameridan
Guest
Posts: n/a
Thanked:
 
      04-29-2006, 01:50 AM
I think you are confusing "cost basis" with "contributions". Although they
start out as being the same amount, as you see, they diverge from each other.
The same thing happened to me and I resolved it by keeping a tally of the
contributions in the account details comments section.

"bobmoneyquestion" wrote:

> When calculating my cost basis for a mutual fund in a roth-ira, money
> includes any reinvested dividends and capital gains to the cost basis thus
> when generating returns that are not right.
>
> because roth accounts are pretaxed any dividends or capital gains are not
> taxed and should not be added to the cost basis.
>
> i've gone into the account settings and checked that this account is a
> retirement account and a roth-ira.
>
> any suggestions on how to fix this so i can determine what my actual returns
> are?
> --
> bob

 
Reply With Quote
 
Chris Cowles
Guest
Posts: n/a
Thanked:
 
      04-29-2006, 03:32 AM
"ameridan" <(E-Mail Removed)> wrote in message
news:(E-Mail Removed)...
> The same thing happened to me and I resolved it by keeping a tally of
> the
> contributions in the account details comments section.


Would it not be effective to simply report on a specific payee in the
contributions account?


 
Reply With Quote
 
ameridan
Guest
Posts: n/a
Thanked:
 
      04-29-2006, 01:09 PM
Now that you mention it, IRA REGULAR CONTRIB would do it, but in 20 more
years I might finally have to archive my data file and I'd have to peice
together the information. It's nice to be able to look in the details and
see that IF I need some mula quick, I can pull $24K out of my Roth without
penalty.

"Chris Cowles" wrote:

> "ameridan" <(E-Mail Removed)> wrote in message
> news:(E-Mail Removed)...
> > The same thing happened to me and I resolved it by keeping a tally of
> > the
> > contributions in the account details comments section.

>
> Would it not be effective to simply report on a specific payee in the
> contributions account?
>
>
>

 
Reply With Quote
 
Dick Watson
Guest
Posts: n/a
Thanked:
 
      04-29-2006, 01:18 PM
The problem with the details note is that you have to maintain it.

BTW, it's an Investment. Unless they redesign archiving, you could archive
it 1,000 years from now and the Investment Buy would still be there.

"ameridan" <(E-Mail Removed)> wrote in message
news:(E-Mail Removed)...
> Now that you mention it, IRA REGULAR CONTRIB would do it, but in 20 more
> years I might finally have to archive my data file and I'd have to peice
> together the information. It's nice to be able to look in the details
> and
> see that IF I need some mula quick, I can pull $24K out of my Roth without
> penalty.



 
Reply With Quote
 
Chris Cowles
Guest
Posts: n/a
Thanked:
 
      04-29-2006, 05:32 PM
"Dick Watson" <(E-Mail Removed)> wrote in
message news:(E-Mail Removed)...
> The problem with the details note is that you have to maintain it.
>
> BTW, it's an Investment. Unless they redesign archiving, you could
> archive it 1,000 years from now and the Investment Buy would still be
> there.


Contributions to the cash account get archived. I think those transactions
are the focus of the report.
--
Chris Cowles
Gainesville, FL



 
Reply With Quote
 
bobmoneyquestion
Guest
Posts: n/a
Thanked:
 
      05-03-2006, 03:04 AM
Cal learner...i didn't realize that this was a website where MVP's would
ridicule you for being confused about a problem. If this is beneath your
scope of expertise maybe someone else can help me.

I'll try to explain my problem again:

let's say i invest 1000 in mutual fund xyz(in a roth-ira) in 2005 and it
pays me 100 in dividends which are reinvested.

in a regular account my cost basis would jump to 1100 because of the
reinvested dividends and my return on investment would be calculated based on
nav vs. cost basis (1100)

in a roth ira wouldn't my cost basis remain at 1000 because i didn't have to
pay taxes on the dividends?

i'm showing in some of my roth - ira mutuals annual returns %'s that are
what i think are less than my actual returns because they are adding any
reinvested dividends or gains to my initial investment.

does this make sense or is this more of a "non sequitur"?

bob




that i would be ridiculed for my confusion about this problem...> "That is a
non-sequitur". i never heard that saying before but after googling it I
understand it know. ma
--
bob


"Cal Learner-- MVP" wrote:

> In microsoft.public.money, bobmoneyquestion wrote:
>
> >When calculating my cost basis for a mutual fund in a roth-ira, money
> >includes any reinvested dividends and capital gains to the cost basis thus
> >when generating returns that are not right.
> >
> >because roth accounts are pretaxed any dividends or capital gains are not
> >taxed and should not be added to the cost basis.

>
> That is a non-sequitur.
>
> >
> >i've gone into the account settings and checked that this account is a
> >retirement account and a roth-ira.
> >
> >any suggestions on how to fix this so i can determine what my actual returns
> >are?

>
> I could try to explain why shares bought with dividends are
> logically part of the basis. From a tax point of view, can we at
> least agree that the "basis" of the shares is moot?
>

 
Reply With Quote
 
Dick Watson
Guest
Posts: n/a
Thanked:
 
      05-03-2006, 03:38 AM
Since the only use of "cost basis" is in computing taxable capital gains and
there is no such thing for a Roth IRA, I'm not sure why you'd care. I.e.,
cost basis is not relevant to a Roth IRA.

At any rate, even if this were a conventional investment account where gains
and/or dividends were taxable, the reinvested dividends ***are*** part of
your cost basis. They "pay" you the dividend, you pay tax on it, and then
reinvest it. You are reinvesting "after tax" money. It's no different from a
tax point of view than the money you put in in the first place. So, the
reinvested amount adds to your cost basis. That's how this cost basis stuff
works. I think that was Cal's point. I.e., except in accounts where cost
basis is irrelevant, reinvested dividends do add to your cost basis.

I'm sure Cal understood your question. This isn't a knock, but I think he
understood it better than you did--as noted above.

"bobmoneyquestion" <(E-Mail Removed)> wrote in
message news:(E-Mail Removed)...
> Cal learner...i didn't realize that this was a website where MVP's would
> ridicule you for being confused about a problem. If this is beneath your
> scope of expertise maybe someone else can help me.
>
> I'll try to explain my problem again:
>
> let's say i invest 1000 in mutual fund xyz(in a roth-ira) in 2005 and it
> pays me 100 in dividends which are reinvested.
>
> in a regular account my cost basis would jump to 1100 because of the
> reinvested dividends and my return on investment would be calculated based
> on
> nav vs. cost basis (1100)
>
> in a roth ira wouldn't my cost basis remain at 1000 because i didn't have
> to
> pay taxes on the dividends?
>
> i'm showing in some of my roth - ira mutuals annual returns %'s that are
> what i think are less than my actual returns because they are adding any
> reinvested dividends or gains to my initial investment.
>
> does this make sense or is this more of a "non sequitur"?



 
Reply With Quote
 
 
 
Reply

Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are On
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Unknown cost basis of a spinoff and unknown basis date saljflsajal General Accountancy Discussion 1 04-05-2011 01:07 PM
Individual Cost basis entries do not add to Total Account Cost Bas avw Microsoft Money 8 05-04-2009 01:12 AM
Mutual fund average basis rule - when can you revert to cost basis (actual cost of each share)? Mark Freeland Tax 1 11-28-2008 05:21 AM
cost basis/avg cost per share David Microsoft Money 2 03-03-2004 12:00 PM
cost basis/avg cost per share David Microsoft Money 1 03-01-2004 12:26 PM


All times are GMT. The time now is 09:10 AM.
Posts in this forum do not constitute the advice of AccountantForums.com or its members. Financial advice should always be taken from qualified advisors before committing to a financial decision.