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Cost basis error when transferring assets between accounts

VerbalK

I did a direct transfer between roth iras. I did a "shares transferred between accounts" option, which then became a pair of "shares removed"/"shares added" transactions. But now, whenever I look at any report in the investing tabs/reports, my cost bases are wrong.

I'm guessing I could reenter these as a sale->cash transfer->epurchase to fix (which would be a pain). Any other ideas?

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Sherlock

The Added transactions should provide the appropriate cost and date the shares were acquired. If these are correct, perhaps there are placeholder transactions: https://community.quicken.com/discussion/7267839/quicken-faq-managing-placeholder-entries-in-quicken-for-windows

VerbalK

okay, no placeholders, but the added transactions aren't the problem. The issue is with another account (TSP retirement). Perhaps I'll start a different thread. The issue is I sold one fund (Lifecycle 2040) and bought another (Lifecycle 2020) in February. These are all manual investments since no ticker symbol. For some reason, after the sale/purchase, my cost basis went up nearly $100,000

Tom Young

"For some reason, after the sale/purchase, my cost basis went up nearly $100,000 "

You're not under the mistaken belief that the cost basis from the old fund should "carry over" to the new fund, are you? Or are you saying that you're seeing something along the lines of "I bought the new fund for $25,000 but Quicken shows the basis as $125,000."

VerbalK

I guess I am under a mistaken belief that interfund transfer should keep the same basis in a retirement account. Why wouldn't it?

I'm in the process of changing the sell/buy transactions to a mutual fund conversion, which seems to be doing the trick, but is taking a while

Sherlock

VerbalK said:

okay, no placeholders, but the added transactions aren't the problem. The issue is with another account (TSP retirement). Perhaps I'll start a different thread. The issue is I sold one fund (Lifecycle 2040) and bought another (Lifecycle 2020) in February. These are all manual investments since no ticker symbol. For some reason, after the sale/purchase, my cost basis went up nearly $100,000

You are not simply transferring shares between accounts. You sold shares of one security and purchased shares of another. I suggest you use the Sell - Shares Sold and the Buy - Shares Bought wizards to enter the appropriate transactions.

Jim_Harman

It is normal for your cost basis to change when you sell and buy securities.

Say you have bought the Lifecycle 2040 over a number of years and the share price has increased. Your cost basis might be $50,000 and now it is worth $150,000.

When you sell it and buy $150,000 [corrected] of the LC2020, your cost basis in the new security is $150,000, $100,000 more than before.

Or are you seeing something different?

Note that cost basis is not important in a tax deferred account like the TSP, because you pay tax on the full amount you withdraw, not the capital gain.

In a taxable account, you would owe tax on the $100,000 of capital gain.

VerbalK

I guess I understand. I realize it doesn't really matter, but I like the cost to performance chart for reference, so I went ahead and changed these transactions to a mutual fund conversion. To a while to reprocess 14 years of contributions, but looks a lot nicer.

Jim_Harman

If you are looking at the long term performance of your investments, I suggest you consider the Investment Performance report. This shows the Average Annual Return, which is the same as the Internal Rate of Return or IRR, for the securities, accounts, and time period you select.

The IRR is the same as the compounded annual interest rate a savings account would have had to earn to match the performance of your investments.

Don B

I was having similar issue with my TSP account in Quicken trying to compare Cost Basis to Lifetime Contributions on the annual statement from TSP. Small difference but it was driving me nuts. Thanks for the reminder that it ultimately won't matter because all distributions are taxed as income with no difference between basis and gain like in taxable accounts.