My wife has 401(k) Savings and Employee Stock Ownership Plan (ESOP) Plan. Received company stock as incentive and 401(k) match and are all vested.
Large percentage of her portfolio in company stock. Trying to re-balance the portfolio. We are planning to sell a portion of company stock, mutual funds, and transfer the cash to self-directed brokerage account within 401(k). Buy stocks, bonds, and other investments in the brokerage account.
My wife is not planning to take distributions in the near future. She is planning to start at 59-1/2 or 70-1/2. The 401(k) is managed by Principal Financial Group and account statements are not user friendly.
My question is, do we need to keep track of costs basis for the investments? I assume we might need that when we take the distribution. We have all the account statements and planning on using Quicken Premier 2015 edition to keep track of the cost basis.
Any suggestions and comments about 401(k) record keeping, I would appreciate it.
My wife’s company keeps on changing the administrator of 401(k) plan. In addition, the 401(k) plan investment committee changes investment options every year.
You will not need to keep track of the cost basis for the funds inside the 401k as those are qualified funds and her basis will be deemed to be zero as she has been receiving a tax deduction for her contributions.
Keep in mind that the " brokerage window" inside her 401(k) plan will charge a trading commission per trade placed and these fees can be costly, I have seen trading fees inside plans range from $7 per trade to as high as $25 per trade, and those costs are usually born by the participant. Let's hope your wife's plan has costs on the lower end of the scale.
Changing an administrator of a retirement plan can be a burden to all parties involved, but sometimes is necessary as the sponsor company wants to ensure their plan is receiving the best pricing for all the plan participants. Annual plan investment reviews are beneficial as the committee usually replaces under performing investments with better performing and lower cost options, I wouldn't worry about these changes as they usually end up benefiting the participants in the long run. It is good to have a plan sponsor that is keeping a close eye on all the aspects of their retirement plan.
I hope this helps, please feel free to reach out with any additional questions.