Do IRAs at Vanguard display cost basis info?

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userwithconcern
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Do IRAs at Vanguard display cost basis info?

Post by userwithconcern » Sat Aug 01, 2020 3:23 pm

Is there a place on the Vanguard site where it shows cost basis info for IRAs?

Is this different for IRAs rolled over (ACATS) from a different IRA provider?

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Re: Do IRAs at Vanguard display cost basis info?

Post by jebmke » Sat Aug 01, 2020 3:30 pm

Vanguard shows the "cost basis" for IRAs the same as taxable accounts. But that cost basis is irrelevant for tax purposes. The tax basis for IRAs is tracked via your tax returns when you file a form 8606. This only applies if you made non-deductible contributions. Obviously when you put money in an IRA Vanguard has no idea whether you deducted it or not.
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retiredjg
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Re: Do IRAs at Vanguard display cost basis info?

Post by retiredjg » Sat Aug 01, 2020 3:41 pm

They do have a link for cost basis, but I'm not sure it is a number than has any use. So I don't recall ever looking at it and don't know what it contains.

If you are actually thinking of "basis" (already taxed money), the answer is definitely "no". Vanguard does not have that information.

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Re: Do IRAs at Vanguard display cost basis info?

Post by retired@50 » Sat Aug 01, 2020 3:43 pm

I think they typically use average cost as the only method in an IRA.

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userwithconcern
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Re: Do IRAs at Vanguard display cost basis info?

Post by userwithconcern » Sat Aug 01, 2020 3:46 pm

Is it on a different page for an IRA versus a taxable brokerage account?

livesoft
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Re: Do IRAs at Vanguard display cost basis info?

Post by livesoft » Sat Aug 01, 2020 3:54 pm

retired@50 wrote:
Sat Aug 01, 2020 3:43 pm
I think they typically use average cost as the only method in an IRA.

Regards,
For mutual funds, yes, but what about other investments. Average cost is a concept used for mutual fund only.
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userwithconcern
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Re: Do IRAs at Vanguard display cost basis info?

Post by userwithconcern » Sat Aug 01, 2020 6:50 pm

retiredjg wrote:
Sat Aug 01, 2020 3:41 pm
They do have a link for cost basis, but I'm not sure it is a number than has any use. So I don't recall ever looking at it and don't know what it contains.

If you are actually thinking of "basis" (already taxed money), the answer is definitely "no". Vanguard does not have that information.
Can you please tell me what kind of information you see on your Vanguard IRA account cost basis page?

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Re: Do IRAs at Vanguard display cost basis info?

Post by retired@50 » Sat Aug 01, 2020 7:50 pm

livesoft wrote:
Sat Aug 01, 2020 3:54 pm
retired@50 wrote:
Sat Aug 01, 2020 3:43 pm
I think they typically use average cost as the only method in an IRA.

Regards,
For mutual funds, yes, but what about other investments. Average cost is a concept used for mutual fund only.
Thanks for the correction. I only hold mutual funds so it didn't dawn on me that you can't average out stock or ETF prices.

Regards,
This is one person's opinion. Nothing more.

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Re: Do IRAs at Vanguard display cost basis info?

Post by livesoft » Sat Aug 01, 2020 7:57 pm

userwithconcern wrote:
Sat Aug 01, 2020 6:50 pm
Can you please tell me what kind of information you see on your Vanguard IRA account cost basis page?
Here is a screen capture from a Vanguard IRA account cost basis page:

Image

So here's a question for everyone: How can a short-term loss be on non-covered shares? That's Vanguard for you! LOL!
Last edited by livesoft on Sat Aug 01, 2020 8:01 pm, edited 1 time in total.
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rob
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Re: Do IRAs at Vanguard display cost basis info?

Post by rob » Sat Aug 01, 2020 7:59 pm

They do not do it for funds that hold a mixture of covered and non-covered - at least that's what I think is causing most of mine to be removed. At least in taxable they split those.
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Re: Do IRAs at Vanguard display cost basis info?

Post by PaunchyPirate » Sun Aug 02, 2020 8:58 am

livesoft wrote:
Sat Aug 01, 2020 7:57 pm

So here's a question for everyone: How can a short-term loss be on non-covered shares? That's Vanguard for you! LOL!
According to the help note if you hover over the "Noncovered Shares" label on their website... "Noncovered shares include shares acquired before the effective date for cost basis reporting requirements or shares acquired in an account that isn't subject to Form 1099-B reporting, such as an IRA or C-corporation account. In these cases, Vanguard doesn't report cost basis information to the IRS."

So even brand new shares are non-covered in an IRA and could be considered to have short-term gains/losses. At least according to Vanguard's definition.

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Re: Do IRAs at Vanguard display cost basis info?

Post by grabiner » Sun Aug 02, 2020 9:31 am

retiredjg wrote:
Sat Aug 01, 2020 3:41 pm
They do have a link for cost basis, but I'm not sure it is a number than has any use. So I don't recall ever looking at it and don't know what it contains.

If you are actually thinking of "basis" (already taxed money), the answer is definitely "no". Vanguard does not have that information.
No brokerage can report this information, because it doesn't know whether your traditional IRA contribution was deductible; that depends on your income, and on whether you or your spouse was covered by a retirement plan.

In addition, non-deductible contributions are prorated across all IRAs when you withdraw. If you contributed $10K of non-deductible money to a Vanguard IRA, and rolled $10K of deductible money into a Fidelity IRA, you now have $20K with a $10K basis. If you withdraw $2K from either account, you pay tax on $1K, but neither Vanguard nor Fidelity knows about the other IRA.

You will track this amount yourself when you file Form 8606. (And you may have to track it separately in some states; NJ, for example, doesn't allow a deduction for IRA contributions, and taxes all but the NJ basis when you withdraw.)
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Re: Do IRAs at Vanguard display cost basis info?

Post by drzzzzz » Sun Aug 02, 2020 9:42 am

livesoft wrote:
Sat Aug 01, 2020 7:57 pm
userwithconcern wrote:
Sat Aug 01, 2020 6:50 pm
Can you please tell me what kind of information you see on your Vanguard IRA account cost basis page?
Here is a screen capture from a Vanguard IRA account cost basis page:

Image

So here's a question for everyone: How can a short-term loss be on non-covered shares? That's Vanguard for you! LOL!
Thanks for the amusing screen shot and post.

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Re: Do IRAs at Vanguard display cost basis info?

Post by Seasonal » Sun Aug 02, 2020 9:55 am

livesoft wrote:
Sat Aug 01, 2020 7:57 pm
userwithconcern wrote:
Sat Aug 01, 2020 6:50 pm
Can you please tell me what kind of information you see on your Vanguard IRA account cost basis page?
Here is a screen capture from a Vanguard IRA account cost basis page:

Image

So here's a question for everyone: How can a short-term loss be on non-covered shares? That's Vanguard for you! LOL!
I recently had a conversation with my Vanguard rep about numbers for non-covered shares from their basis page that were clearly wrong. His answer was that numbers for non-covered shares aren't reported to the IRS, so use whatever numbers I believe to be accurate.

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Re: Do IRAs at Vanguard display cost basis info?

Post by retiredjg » Sun Aug 02, 2020 10:57 am

I think it is just bizarre that they have such a page at all. The concept of capital gains or losses does not even apply to money in an IRA, at least not in a tax sense. Nor does the short term or long term information mean anything in an IRA.

Why do they do that? Do other brokerages do this too?

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Re: Do IRAs at Vanguard display cost basis info?

Post by livesoft » Sun Aug 02, 2020 11:03 am

retiredjg wrote:
Sun Aug 02, 2020 10:57 am
Why do they do that? Do other brokerages do this too?
My other brokerages track the cost basis of all accounts. I think this is important to track performance AND there does not need to be TWO separate ways of dealing with accounts along with all the extra software programming, web site display, client education that goes along with doing things differently for no good reason. Or put it another way: If people have IRAs and get used to seeing the cost basis info, then add a taxable account, then they are not bamboozled by the new stuff. Or if people have a taxable account are used to seeing the cost basis info, then add an IRA and it all disappears, then they are bamboozled by the missing stuff.
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Re: Do IRAs at Vanguard display cost basis info?

Post by retiredjg » Sun Aug 02, 2020 11:16 am

It would make sense to me to track cost basis in a way that applies to the account, not to a different kind of account.

So I guess you are saying that your other brokerages do it the same way.

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Re: Do IRAs at Vanguard display cost basis info?

Post by grabiner » Sun Aug 02, 2020 1:01 pm

livesoft wrote:
Sun Aug 02, 2020 11:03 am
retiredjg wrote:
Sun Aug 02, 2020 10:57 am
Why do they do that? Do other brokerages do this too?
My other brokerages track the cost basis of all accounts. I think this is important to track performance AND there does not need to be TWO separate ways of dealing with accounts along with all the extra software programming, web site display, client education that goes along with doing things differently for no good reason.
Cost basis is not useful in tracking performance. If you buy stock A for $1000 and it grows to $1500, buy stock B for $1000 and it falls to $500, you have $2000 in an account with a $2000 cost basis, which is correct since you broke even. If you then sell stock B to buy something else for $500, your performance doesn't change but your cost basis decreases to $1500.

What a brokerage should display for tracking peformance is an internal rate of return; Vanguard does this, although with a ten-year limitation.
Or put it another way: If people have IRAs and get used to seeing the cost basis info, then add a taxable account, then they are not bamboozled by the new stuff. Or if people have a taxable account are used to seeing the cost basis info, then add an IRA and it all disappears, then they are bamboozled by the missing stuff.
Here, I would disagree because of the inconsistency caused by the IRS. What the IRS calls basis in an IRA does not match the usual definition, so investors using the brokerage's "basis" in the IRA when they fill out Form 8606 will pay the wrong amount of tax.
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Re: Do IRAs at Vanguard display cost basis info?

Post by FIREchief » Sun Aug 02, 2020 1:18 pm

userwithconcern wrote:
Sat Aug 01, 2020 3:23 pm
Is there a place on the Vanguard site where it shows cost basis info for IRAs?
Are you asking about cost basis for individual holdings within the IRA account or the basis in IRA's that is reported and tracked on IRS form 8606?
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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Re: Do IRAs at Vanguard display cost basis info?

Post by rob » Mon Aug 03, 2020 10:08 pm

retiredjg wrote:
Sun Aug 02, 2020 10:57 am
I think it is just bizarre that they have such a page at all. The concept of capital gains or losses does not even apply to money in an IRA, at least not in a tax sense. Nor does the short term or long term information mean anything in an IRA.

Why do they do that? Do other brokerages do this too?
Assuming you just mean US tax... but why not just have a single process as it does no harm. Same answers for all questions, same code for web-site etc.
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