Sentences with phrase «from nondeductible contributions»

Basis, also referred to as after - tax balances, accrue in retirement accounts from nondeductible contributions and rollovers of after - tax amounts to IRAs.

You might have a traditional IRA with basis from nondeductible contributions or rollovers.

For example, if 60 % of your IRA balance comes from nondeductible contributions and you convert $ 8,000 of that IRA, you'll report $ 3,200 of income from the conversion (40 % of $ 8,000).

In the case you do have basis from nondeductible contributions, effectively you get credit for it spread evenly throughout your retirement.

Not exact matches

Even if you're not eligible to deduct your traditional IRA contribution, you can make nondeductible contributions and still benefit from tax - deferred investment growth.

Once you make a nondeductible contribution to a Traditional IRA or rollover after - tax amounts, any distributions taken from the IRA will include a prorated amount of pre-tax and post-tax assets.

Nondeductible contributions may necessitate some very complicated paperwork when you begin withdrawals from your account.

Contributions are nondeductible — therefore, unlike the Traditional IRA, distributions from an Educational IRA are penalty free and tax - free

In later years, when you start taking distributions from your Traditional IRA, that nondeductible contribution will not be taxed upon withdrawal.

Once you make a nondeductible contribution or roll over after - tax amounts to any of your Traditional, SEP or SIMPLE IRA, any subsequent distributions from any of your Traditional, SEP or SIMPLE IRAs will include a prorated amount of pretax and post-tax assets, as these IRAs are aggregated for the purposes of determining the taxable amount of any distributions.

Of that $ 20,000, $ 13,000 was taxable upon the conversion, and $ 7,000 was not because it came from nondeductible IRA contributions.

«If you make your contribution to the nondeductible traditional IRA and then leave it there until it accumulates sufficient investment income to exceed the full contribution amount before you convert it, you will have to reverse the excess amount of the conversion before the end of the year or face a fine from the Internal Revenue Service.