What Is Basis In Retirement Plan?

  1. 225 POINTS
    Frederick Saide
    Since a tax qualified plan defers taxation until money is withdrawn there is no cost basis. Or to put it another way the basis is $0. All funds coming out will be taxed as ordinary income when received. If funds are rolled over to an IRA those funds when received will be taxed as ordinary income.
    Answered on January 21, 2014
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  2. 37376 POINTS
    David G. Pipes, CLU®, RICP®
    Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
    The term "basis" means the sum of your personal after tax contributions.  If you have basis in an existing pension plan you will receive your basis back income tax free.  You will only be taxed on pre-tax contributions and the interest earned.  Poeple who have a non-contributory retirement plan do not have any basis in the plan.
    Answered on March 5, 2014
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