: Cost Basis in Retirement Accounts Irrelevant? Since distributions are considered income for traditional accounts, and Roth distributions are not taxed, does using Lot Identification instead of Average Cost (or vice versa)

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One thing to keep in mind is that with Roth accounts, there are different withdrawal considerations based on your contributions.

For example, you can withdraw Roth IRA contributions whenever you want in the future.

However this really has nothing to do with your cost basis and purely to do with the contribution amount vs balance.

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Cost basis is irrelevant because the entire distribution is taxed as ordinary income even if the custodian distributes stock or mutual fund shares to you. Such distributions save you the brokerage fees that you would incur had you taken a cash distribution and promptly bought the shares outside the retirement account for yourself but they have no effect on the tax treatment of the distribution: the market value of the shares distributed to you is taxed as ordinary income, and your basis in the newly acquired shares outside the retirement account is the market value of the shares, all prices being as of the date of the distribution.