Any reason to keep track of lots, or even transactions, in an IRA?
January 4, 2014 4:55 PM Subscribe
Am I understanding the USA's IRA laws correctly that all I really have to keep track of, in order to eventually (years from now) take money out without penalty or double taxation or such, is the amount of after-tax money I put into it over the years?
posted by Flunkie to Work & Money (5 answers total) 2 users marked this as a favorite
For example, let's say this year I put in $5,000, of which $1,000 is after-tax. Then for the next 19 years, I put in $5,000 more each year, none of which is after-tax. Over those twenty years, I do all sorts of wacky transactions in the account itself - I buy this stock, I sell half of it, I get dividends, I buy another stock, blah blah blah. If this were a normal (non-retirement) account, I'd be keeping strict track of all of those things, down to the specific lot level, so that I could correctly (and optimally) keep track of tax-related events like capital gains. But am I understanding correctly that since this is an IRA, all I have to know, in order to correctly and optimally pay taxes when I eventually withdraw, is "Over the years I have put in $1,000 of after-tax money"?
To be clear, I'm interested in whether there's any tax-related reason to keep track of more than just the after-tax contributions, not merely assuming that I'd be taking stuff out at the "normal" time. For example I'd also be interested if there were some benefit to having kept track of all this if it winds up I withdraw stuff early (whether via penalty or via something like a SEPP). Or if there's some benefit to having kept track if I eventually wind up converting from one IRA type to another. Or any such thing.
Also, in case it matters: I have both a traditional IRA and a Roth IRA. The traditional has both pre-tax and after-tax contributions. I am interested in this question for both.