Regarding FIFO vs. Avg. Cost Basis on Funds

Lynn Ostrem on

Hi folks,

For those of you who are figuring out the new rules, I would like your comments. I just spoke w/Vanguard where my husband and I have the bulk of our retirement funds in tax-deferred accounts. I was guided to our account set up page where all of our mutual funds are listed as Average Cost Basis. I was told that Vangard does not give us the option of FIFO in deferred accounts. I was just wondering. Could this affect me later on when it's time to take distributions? Granted it's a ways down the road, but...??

Thanks,

Lynn Ostrem

garbagecop@gmail.com

Laurie Frederiksen on

Hi Lynn,

The short answer is no.

For example if you have a regular IRA, the amount you will be taxed on is the difference between the amount you put in the account and what you take out.

Each of the gains that contribute to the amount you take out are not taxed individually so the cost basis for any specific investment doesn't matter from a tax standpoint.

Hope that helps.

--
Laurie Frederiksen
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