What is the purpose of basis for an IRA in Income InSight?

The Basis field is available for a Qualified Account (IRA or other) within Income Insight largely for the "exceptions to the rule." 

While the cost basis of an IRA isn't necessary in most cases, it can be helpful for a "back of the envelope" of contributions versus value.  In Income InSight, the field is listed for any post-tax amounts that may be held in the Qualified Account being entered. 

Basis can also have an impact in two specific situations when the tax basis of the entire retirement account will be affected: 

  • If non-deductible contributions have been made to a traditional IRA or qualified account or, 
  • If certain Roth account distributions do not meet the qualifications for tax-free treatment.  

Again, while these are unusual circumstances, Income InSight has that built in functionality. 

For additional detail, visit https://www.irs.gov/taxtopics/tc703