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After a grueling 2 1/4 hours with a cpa we came up with a cost basis of my roth ira between Vanguard and Schwab. He told be I might have to ammend my state of Arizona tax for because the state of Arizona has not made up it mind on taxes. I could not get an answer from a cpa do you have to pay foreign taxes on marijuana stocks he also advised me to stay the hell away from partnership unless you and pay double in fees what you make in partnerships.
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a cost basis of my roth ira between Vanguard and Schwab.

Why would you need a cost basis on a Roth IRA?
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How the money went into a Roth determines how it comes out. Contributions are treated differently from conversions in the order of distributions. It also makes a difference if the distribution isn't qualified for example if the first Roth is less than five years old. There are also some considerations if the distribution is made before age 59 1/2. I had to include basis on my withdrawal this year since the 1099R distribution code from the current provider couldn't verify that I'd had an IRA for more than 5 years.
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I had to include basis on my withdrawal this year since the 1099R distribution code from the current provider couldn't verify that I'd had an IRA for more than 5 years.

That appears to be a problem on the provider's side. Are you saying that you cannot provide documentation to the provider showing the IRA is more than 5 years old, or that the provider is not willing to amend the 1099R even if it received such information. It's also puzzling to me that the paper trail is so bad that the current provider did not receive details such as when the IRA was opened from the previous provider.

Bob
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They know, but it wasn't opened with them and they can't just take my word for it. They also don't know if any of the money prior to it being with them was conversions. They used Code T which is distribution with known exception and I needed to provide more information. Putting in the contribution history on the 8606 took care of that. Although it is still just my word for it.
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That appears to be a problem on the provider's side.

No, it is not.

A Roth IRA custodian can only know how long their account has been open, not any other Roth IRA you might have. They are not required to keep or pass along that kind of information. It is up to the individual taxpayer to maintain the records showing how long they have had a Roth IRA account.

The early distribution code is probably the one for "Premature distribution, no known exception." The custodian is the one who doesn't know of an exception, but the IRA owner might. No corrected 1099 will be needed.

It's also puzzling to me that the paper trail is so bad that the current provider did not receive details such as when the IRA was opened from the previous provider.

There doesn't have to be a previous provider. You could have two separate Roth IRA accounts with two different custodians. The first Roth IRA may have been open long enough even if the second hasn't been. There is no reason for the two (or more) custodians to know about each other.

--Peter
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Thanks for that explanation.
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Interesting - my Roths have moved all to a single broker now - they were at a different broker and a bank.
Should I save the docs that show when each one was opened or do you just have to prove the earliest?
thanks in advance,
nag
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Should I save the docs that show when each one was opened or do you just have to prove the earliest?

You would need to prove that you have had a Roth IRA continuously for five [tax*] years before the potentially tax-free withdrawal. So you would need to keep records from a previous custodian until your current Roth IRA has been open for 5 years.

--Peter


* If you need to know more, ask. It's complicated (because it's taxes), and probably doesn't apply to you.
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And note that if you did not keep the needed records, you probably can obtain copies of old statement from your then custodian for a fee.

I should think any brokerage statement or custodian statement showing that you owned them 5 years ago would be sufficient.

Now that many statements are electronic, one wonders how long they will continue to be available. Paper is heavy, takes up storage space, etc, etc, but is still legible for at least 100 yrs. Electronics equipment gets replaced and someone has to convert the old files one way or another.
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Electronics equipment gets replaced and someone has to convert the old files one way or another.
At this point, PDF files are standard enough that they won't need to be converted, just copied over. Just like ASCII text files were standard enough 30+ years ago and we have dozens of applications that open them now.

Now that many statements are electronic, one wonders how long they will continue to be available.
IMO that mostly depends on whether the broker stays in business. And how long they feel they need to keep the records accessible to their customers.
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I wonder how much of that old data is still on magnetic tape? What is the life expectancy of magnetic tape? Will they copy the old tapes to maintain them? Or transfer the data to the cloud?

I recall Johnie Carson saying that tapes of his old shows were discarded because no one wanted to pay the storage fees.

Cloud storage must be a lot less costly than physical storage of magnetic tapes. But its not free.

I understand the masters of films on magnetic tape are stored in special vaults to protect them from the effect of magnetics in the environment.

The incentives to discard old, little used records are many.
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I am so glad for this thread, I have been going through paperwork and almost tossed some Roth docs.
I didn't know that any new broker wouldn't know when a rolled over Roth would have been started.

As always, thanks
nag
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Just info on some docs that I have been able to get from brokers during a change in brokers.

It's been hit or miss.

Some old Drips, not much info. Some brokerages, not helpful. Just one or two that actually saw the tax requirements change and went back through their data and did in fact go back many decades, although they did round shares from 4 to 3 digits.
Kudos to them for trying.

Thankfully there's Quicken and regular entries that have been kept up on and statements.
nag
Who thinks the majority of brokerages will start charging a lot for back records, if they have them
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If you rolled over a Roth IRA to a new custodian, directly or indirectly, as mentioned previously, if this transfer has happened within the past 5 years and you take a distribution, the new custodian will not provide the Q code in box 7 as the new custodian simply doesn't know how long you've held a Roth, only that you haven't held a Roth at least 5 years with them, assuming you are at least 59.5.

Your source documents on holding period are the 5498s the custodian sent you for each past contribution year. You do not complete an 8606 on Roth contribution as you would with non-deductible TIRA contributions. However, annual end-of-year Roth account statements would also work, assuming you've kept them.

BruceM
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Who thinks the majority of brokerages will start charging a lot for back records, if they have them

This is where Peter the Packrat gets to chime in again.

Keeping appropriate tax records are the sole responsibility of the taxpayer. Not the bank. Not the broker. Not the tax preparer. Not the hairdresser's cousin's second wife.

There is a reason banks and brokers send you monthly or quarterly or annual statements. They do that in part so you will have records of your transactions with that bank or broker. At that point, they have discharged their responsibility. They have accounted to you with their version of events. If you need those records for some reason, it's up to you to keep them.

In my business, I keep a lot of records on behalf of my clients. I make it clear in my engagement letter that these are not all of they records they may need, and that they will be destroyed after a number of years. Mainly, I keep these to provide a better service to my clients. But if you are no longer a client, I'm going to get rid of your old records. I don't need them hanging around, providing a potential liability in case they are stolen.

With a scanner, you can keep a lifetime of records on a single hard drive. So storage space is no longer an issue.

--Peter <== who is still shredding his old personal files he no longer needs from the days before scanners.
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Keeping appropriate tax records are the sole responsibility of the taxpayer. Not the bank. Not the broker. Not the tax preparer. Not the hairdresser's cousin's second wife.

Dude, I was totally with you until that last bit. I have a lot of ground to make up due to depending on the hairdresser's cousin's second wife to keep my records for me! ;)

Draggon
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Dude, I was totally with you until that last bit. I have a lot of ground to make up due to depending on the hairdresser's cousin's second wife to keep my records for me! ;)

Yeah - a common mistake. That's why I mentioned it specifically. :-)

--Peter
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Electronics equipment gets replaced and someone has to convert the old files one way or another.
At this point, PDF files are standard enough that they won't need to be converted, just copied over.


Even with those files that do need "translation" into the new equipment's language and/or format, it's easy enough to write scripts that to do automatically, so long as the translations are written promptly, without too many evolutions intervening.

Eric Hines
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Who thinks the majority of brokerages will start charging a lot for back records, if they have them

This is where Peter the Packrat gets to chime in again.


My broker only charges a nuisance fee for older records, albeit the fee is large enough to be a nuisance.

Beyond that, what Peter said. Hitting up the broker for past records really ought to be just a one or two time occurrence to fill in a gap or to recover from a record keeping mistake. Hitting up the broker for past records ought not be routine matter.

Eric Hines
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... the hairdresser's cousin's second wife to keep my records for me! ;)

Yeah - a common mistake. That's why I mentioned it specifically. :-)


Yeah, but mine's in with the neighborhood's bookie, so I'm good.

Eric Hines
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I understand the masters of films on magnetic tape are stored in special vaults to protect them from the effect of magnetics in the environment.

I think that the majority of "old" films are stored...get this...on film. 35mm reels.

https://www.laweekly.com/film/movie-studios-are-forcing-holl...


https://www.kansascity.com/entertainment/movies-news-reviews...

Mike
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