cost basis

[Guest cgodfrey12]

please explain cost basis on an inkind distribution

[Guest jhilliard]

The cost basis in a fund is the actual amount contributed to that fund. Think of it this way:

I invest $1,000 into a fund (my only deposit, all in one fund) , I get my first statement and my account has $1,250 balance.

My cost basis is $1,000

Make sense?

[Brian Gallagher]

cost basis is simply what you paid for funds in the first place.

if i bought mutual fund a on this schedule:

contribution 1: $10.00

contribution 2: $10.25

contribution 3: $9.75

contribution 4: $10.00

i spent $40.00 buying the investment. that is my cost basis. even if my distribution is for, say, $43.85, the cost basis is still $40.00

[Mary Kay Foss]

I interpreted the question differently. If a plan makes an inkind distribution, the participant is taxed at the fair market value of the asset. That fair market value becomes their basis.

However, if the inkind distribution is of employer stock, the plan's cost of the stock would be the basis. If the inkind distribution was of employer stock and it didn't qualify as a lump sum distribution, the plan's cost is used for after tax contributions that were invested and fair market value is the basis for the rest.