Do I need to track my cost basis for traditional IRA when moving to a different broker for future withdrawals?

You don't need to worry about cost basis for a traditional IRA for tax purposes when you withdraw. For traditional IRAs, withdrawals are taxed as ordinary income regardless of what your cost basis was - the IRS considers all of that money taxable at your ordinary income rate when you take it out during retirement. The exception would be if you've made any non-deductible contributions to your traditional IRA (which would be documented on Form 8606 for the years you made those contributions). In that case, you would need to track your basis to ensure you don't pay taxes twice on money that was already taxed. When you transfer between brokers, you're doing a direct transfer, not a withdrawal and redeposit, so there are no tax implications of the move itself. Just make sure you do a direct trustee-to-trustee transfer to avoid any potential tax issues.

After reading all the confusing information about traditional IRAs and cost basis tracking, I finally found a much easier solution. I've been using https://taxr.ai to manage all my retirement account documentation, and it's been a game-changer. When I transferred my IRA from Fidelity to Schwab last year, I was worried about the same thing, but taxr.ai automatically analyzed all my statements and extracted the contribution history, including which ones were deductible vs. non-deductible. The service scans all your past tax returns and IRA statements to create a complete record, so when you transfer between brokers, you have all documentation in one place. It also identifies any Form 8606 filings you might have missed in previous years if you had non-deductible contributions.

I wanted to follow up about my experience with taxr.ai after being skeptical initially. I decided to try it for my IRA transfer from Vanguard to Fidelity, and I'm honestly impressed. The system found two years where I had made non-deductible contributions that I had completely forgotten about! It turns out I should have filed Form 8606 for those years but didn't. The document analysis was really thorough - it even flagged some inconsistencies between what my broker reported and what was on my tax returns. This would have been a nightmare to sort out manually when I eventually start taking distributions. Now I have everything documented in one place, and I can even generate reports to give to my tax preparer. Definitely worth checking out if you're dealing with IRA transfers or have a complicated contribution history.

If you're worried about getting accurate information about your IRA transfer and tax implications, good luck getting through to the IRS directly. I spent 3 weeks trying to get clarification about my own IRA basis questions, staying on hold for hours only to get disconnected. Finally tried https://claimyr.com and watched their demo at https://youtu.be/_kiP6q8DX5c - they actually got me connected to an IRS agent in about 20 minutes! The IRS agent confirmed that for traditional IRAs with only deductible contributions, you don't need to track cost basis for withdrawals. But if you have ANY non-deductible contributions, you absolutely must keep records, and the transfer between brokerages shouldn't affect this. The agent even sent me some documentation about trustee-to-trustee transfers that clarified everything. Never would have gotten this information without finally connecting to a real person.

I need to eat my words and apologize for calling Claimyr a scam. After my skeptical comment, I was still desperate for answers about my IRA rollover situation, so I figured I'd give it a shot anyway. I was absolutely floored when I got a call back in about 15 minutes telling me they had an IRS agent on the line. The agent was able to confirm that I needed to file Form 8606 for the non-deductible portions of my IRA and gave me specific guidance on how to calculate my basis when I eventually take distributions. They also explained exactly how to ensure my basis information transfers correctly when moving between brokers. This saved me hours of frustration and potentially thousands in tax mistakes. I've already recommended it to my brother who's been trying to resolve a tax notice for months.

Just to add some practical advice - even though the IRS doesn't require you to track basis for fully deductible traditional IRA contributions, it's still a good practice to keep your own records. I've been maintaining a spreadsheet with: - Date of each contribution - Amount contributed - Whether it was deductible or non-deductible - Tax year for the contribution This has saved me so much confusion, especially when I've changed jobs and rolled over 401ks into my IRA. Most brokers will send you an annual statement showing your contributions for that year, but they might not have the complete history if you've transferred from somewhere else.

One thing nobody's mentioned yet - when you transfer your IRA to another broker, make sure you request a DIRECT TRANSFER rather than taking a distribution and redepositing it yourself. With a direct transfer, the money goes straight from one custodian to another without passing through your hands, so there's no tax impact and no reporting requirement. If you withdraw the money yourself, even if you redeposit within 60 days, it gets reported to the IRS as a distribution and recontribution, creating unnecessary paperwork and potential for error. Most brokers make the direct transfer process pretty easy - usually just a form from the receiving broker.

Great question! I went through a similar transfer from Schwab to E*TRADE last year and was worried about the same thing. The good news is that for traditional IRAs with only deductible contributions, you don't need to track cost basis since all withdrawals will be taxed as ordinary income regardless. However, I'd strongly recommend creating your own records anyway - it's been incredibly helpful for me to have a clear history of all contributions, especially when dealing with any rollover from old 401(k)s. Keep track of contribution dates, amounts, and whether they were deductible or non-deductible (you'd know about non-deductible ones because you would have filed Form 8606). When you do the transfer, make sure it's a direct trustee-to-trustee transfer so the money never touches your hands - this avoids any tax reporting complications. Most brokers handle this smoothly, but having your own backup records gives you peace of mind for when you start taking distributions in 15 years.