Basis in an IRA

[karen1972]

I always wondered how the Govt tracks this in the first place.. like is there some database somewhere actually tracking this and if so shouldn't I be able to get a statement? I've always had a hunch that they only have whatever you submitted in your last tax return as for cost basis. which means if you weren't reporting it the last several returns, not sure how you go about correcting it, other than re-filing or keeping those tax records up to the time you withdraw so you had evidence.

I started getting confused between conversion, contributions, rollovers, switching brokerages, withdrawals due to over contribution, etc its was getting hard to for me to remember so started keeping a spreadsheet.

 

[youbet]

My post tax (non-deductible) IRA contributions were significant and more than one half of my IRA was "basis." It turns out that made it less expensive tax-wise to convert to a Roth, so I did convert over a few years. After I finished the Roth conversion, I converted my 401k to a Rollover IRA which has zero basis and no 8606 involved.

Bottom line - my taxes were slightly more complicated during my Roth conversion years because of having a basis in my TIRA, but not bad. I think people overstate the complications of form 8606 which TurboTax handles easy-peasy.