Retirement Planning/IRA document retention
QUESTION: I contributed to IRA accounts only in the 1980s. Over the decades I moved the money from one bank CD to another. Then a few years ago I moved it to a mutual fund. No money has ever been withdrawn/redeemed. Do I need to keep old statements showing where the money was invested over the years? Or just where it is now invested? I still have all of the old statements, and even old bank books. Do I need to keep documents showing where the initial contributions were invested? Or maybe just when and how much? Does the IRS discuss/document this? Thank you.
ANSWER: You will only need documents if you have a "Cost Basis", or you have contributed after tax dollars to your IRA. If this is not the case, you have nothing to defend to the IRS about your IRAs. Your custodians have reported each year and you can throw away those old statements.
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QUESTION: Cost basis would apply only to the mutual fund?
My only contributions were in the 1980s when I think IRAs were new and only of one type. But I don't remember rules regarding after tax dollars. I remember that I contributed $2000/year for four years ($8000 total.) And then some rules changed and I no longer contributed. I can't remember if I no longer qualified or if it just didn't seem worth doing. I think my salary level prevented me from contributing, yet my salary wasn't very high. After 1990 I no longer had income from wages. Do you remember any rules from way back then?
I don't plan to access any of my IRA money until I'm required to do so. At that point I'll need to redeem an amount/percentage determined by the IRS and then cost basis comes into play?
When I mentioned cost basis, it was in reference to contributions. There is no reason to worry about the cost of an investment in an IRA. There is not enough information to be conclusive about your IRA contributions. On your tax returns, the status of the contributions (taxable or nontaxable)should have been noted.