who is responsible for keeping track of 401K's rollover accounts' cost basis?

Question

I have recently rolled over many of my former employers' 401K accounts into my current 401K account. None of the statements mentioned anything about the breakdown of these transfer amounts, e.g. their cost basis right before the transfer.

Do I have to know the cost basis of all my 401K accounts?

personal_finance_101, my current company's 401K is actually with Vanguard, hence this question (as I am really impressed with Vanguard's management of my 401K portfolio.)

Answer 1

You don't need to know the cost basis. When you take money out of a 401k the entire amount is taxed as income so it doesn't matter whether it was contributions or earnings.

On a different note, it is typically best to not roll old 401k money into your new account. A better option would be to open a rollover IRA at a low cost provider like Vanguard so that you have complete control over your money instead of having to rely on your employer and their fund choices.

Good luck!

Answer 2

It doesn't matter. In a 401(k) you are not taxed on anything (contributions or investment gain) until you start to withdraw the money in retirement. Then, every penny you take out is taxed at your current (and hopefully lower) income tax rate. Thus there is no need to know the cost basis.

Answer 3

401k Cost Basis

Answer 4

Very good question, but the investor is responsible for the cost basis.

I was thinking about this -- just a few weeks ago.

You might want to purchase Quicken basic to do this. It is relatively cheap and worth its wait in gold -- PROVIDED THAT YOU READ THE MANUAL!