How do I determine the cost basis on an Inherited IRA?

External question — Personal Finance Stack Exchange Author: Mattman944 Original post: https://money.stackexchange.com/questions/149207 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. I recently inherited a non-spousal IRA. The 10-year rule applies, I understand that. The cost basis on the broker statement for the mutual funds is from 20 years ago when they were purchased. If this were not an IRA, this would be a problem, I wouldn't want to pay capital gain taxes on the funds before they were mine. But, for an IRA, does it matter? I will only be taxed when I withdraw funds, and it will be taxed as income, not capital gains. I would prefer that the cost basis be reset to when the funds became mine so I can more easily see how they are performing. But if there are no tax implications, I can live with it.

External answer — Personal Finance Stack Exchange Author: D Stanley Original post: https://money.stackexchange.com/a/149208 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. The cost basis for inherited assets is typically the value at the time of inheritance, so yes the basis would be stepped up to the value at the time they became yours. But you are also correct that for an IRA it doesn't matter. You will be taxed on distributions, not just the capital gains. Also, if the IRA was not your spouse's (which I'm assuming it what you mean by "non-spousal IRA"), then you must start taking distributions (without penalty) even before you're 70.5. Check with a financial advisor to determine when (and how much) your distribution is required. If it's a large IRA, and you don't want to cash it all out at once, I would find a local financial advisor who can help you manage the assets and tax implications.