Average cost vs specifying lots in retirement account

crowslivebig
crowslivebig Quicken Windows Subscription Member ✭✭
edited September 2023 in Investing (Windows)

As part of rebalancing my IRA, I am entering a sale of a portion of a security and am being asked whether to use average cost or to specify the lots. I believe that, for this particular transaction, taxes don't play a part so it doesn't really matter; however, if I understand correctly, my choice may matter in the future if I decide to buy the same security in a taxable account.

At this point, I chose the average cost method but now I am thinking that I perhaps should have chosen to specify lots. I don't think there is a way to undo this choice in the current data file, but I have a backup file so I could easily restore it and do it the other way. I want to make the right choice before moving ahead and I'd appreciate your thoughts on this. If I do specify lots, does it matter which ones I choose? There are three lots and only one is big enough to handle the entire sale. TIA

Comments

  • crowslivebig
    crowslivebig Quicken Windows Subscription Member ✭✭

    P.S. In case it matters: the security is a mutual fund and that largest lot is also the oldest lot.

  • Jim_Harman
    Jim_Harman Quicken Windows Subscription SuperUser ✭✭✭✭✭
    edited August 2023

    As you say, in an IRA it does not matter for tax purposes.

    Quicken has an issue with average cost if of there is ever a share class conversion in a fund, so I would recommend you use Oldest First (FIFO)

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  • crowslivebig
    crowslivebig Quicken Windows Subscription Member ✭✭

    I just successfully completed the restore and re-entering the sale using FIFO instead of average cost. Thank you very much. @Jim_Harman! Your help gave me peace of mind.

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