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Cost basis

Also called: basis

What you paid for an investment, including reinvested dividends. When you sell, only the amount above basis is a taxable gain.

In a taxable brokerage account, the higher the basis relative to the balance, the less tax a withdrawal triggers. RetIQ tracks one pooled basis for all brokerage accounts: it rises with contributions and reinvested dividends and falls proportionally with withdrawals.

Pre-tax accounts generally have no basis, so every dollar withdrawn is ordinary income.

Sources

The current-year figures and the numbers from your own plan appear inside RetIQ. Open the app →

Related

long-term-capital-gainsstep-up-in-basispro-rata-rule

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