Sentences with phrase «of nondeductible contributions»

However, you'll still have to pay tax on amounts not considered a return of your nondeductible contributions.

Bear in mind that a traditional IRA has basis only to the extent of your nondeductible contributions.

Some people have traditional IRAs that consist mostly of nondeductible contributions.

A: If you convert the entire amount of all traditional IRAs you own, then the non-taxable part of your rollover distribution is simply the total amount of nondeductible contributions you made to all of those IRAs, less the amount of nontaxable distributions you received in the past.

Example: You have a traditional IRA with a balance of $ 10,000, which includes $ 6,000 of nondeductible contributions.

Because the aggregation rule makes the taxable distribution the same no matter which account you convert, you can't reduce the taxable distribution amount by converting an IRA with a larger proportion of nondeductible contributions.

Not exact matches

If I an correct, in traditional IRA, the basis, as in 8606, is the portion of the balance due to nondeductible contribution.

The need to save for a secure tomorrow, combined with the power of tax - deferred earnings, makes nondeductible IRA contributions a promising alternative for individuals no longer eligible for deductible IRA contributions.

One advantage of nondeductible IRA contributions is that the earnings are tax - deferred.

If you exceed the income limits, you can still make the maximum annual contribution, but a portion or all of it will be considered a nondeductible contribution.

If you only have one traditional IRA, the amount of the distribution to be taxed equals the account balance on the conversion date minus any nondeductible contributions.

A Roth IRA allows you to receive tax - free distributions of your retirement funds in return for making nondeductible contributions now.

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.

If you convert only part of your traditional IRA, or if you have more than one traditional IRA and don't convert all of them, then the nontaxable part of your conversion distribution will be determined by a formula where the nontaxable percentage is the amount of your total nondeductible contributions (less any nontaxable distributions you previously received) divided by the total balance of all of your traditional IRAs.

A: Yes, but when you determine how much of your conversion distribution is taxable, you're required to treat all your traditional IRAs as if they were one big IRA, so you don't get any advantage if you take the distribution out of the IRA that has the most nondeductible contributions.

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).

Q: How do I determine how much of my distribution is nontaxable if I made nondeductible contributions to one or more of my traditional IRAs?

Income tax is certainly due on the total amount of the distribution, less that part of the distribution that is a return of nondeductible post-tax contributions, if any, to the Traditional IRA.

If you also made nondeductible contributions to your IRAs, some of the amount won't be subject to income taxes.

Keep a record of all nondeductible IRA contributions — and make sure your heirs know where to find the details.

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.

Once you make a nondeductible contribution or roll over after - tax amounts to any of your Traditional, SEP or SIMPLE IRA

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

These work somewhat like nondeductible IRA contributions: they permit tax - deferred buildup of investment earnings, and they create basis in the account so that the portion of your subsequent withdrawals representing these after - tax dollars will not be taxed again.

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.

Or you can split your contributions between types of accounts, deductible and nondeductible.