Tax on IRA withdrawls

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
bob_m10
Posts: 56
Joined: Sat Feb 18, 2017 12:33 pm

Tax on IRA withdrawls

Postby bob_m10 » Sat Mar 18, 2017 8:41 pm

Hi,

If I setup and IRA and I am unable to deduct the contributions, what will taxed when withdrawals are taking in retirement? Would it be just the earnings or the entire amount that is withdrawn? If it is the entire amount, would this be a double tax on the contributions. Thanks

sport
Posts: 5718
Joined: Tue Feb 27, 2007 3:26 pm
Location: Cleveland, OH

Re: Tax on IRA withdrawls

Postby sport » Sat Mar 18, 2017 8:44 pm

bob_m10 wrote:Hi,

If I setup and IRA and I am unable to deduct the contributions, what will taxed when withdrawals are taking in retirement? Would it be just the earnings or the entire amount that is withdrawn? If it is the entire amount, would this be a double tax on the contributions. Thanks

For a traditional IRA, only earnings and tax deductible contributions are taxed upon withdrawal. You need to keep track of the after tax amounts using IRS Form 8606. For a Roth IRA, there are no taxes.

bob_m10
Posts: 56
Joined: Sat Feb 18, 2017 12:33 pm

Re: Tax on IRA withdrawls

Postby bob_m10 » Sat Mar 18, 2017 8:53 pm

sport wrote:
bob_m10 wrote:Hi,

If I setup and IRA and I am unable to deduct the contributions, what will taxed when withdrawals are taking in retirement? Would it be just the earnings or the entire amount that is withdrawn? If it is the entire amount, would this be a double tax on the contributions. Thanks

For a traditional IRA, only earnings and tax deductible contributions are taxed upon withdrawal. You need to keep track of the after tax amounts using IRS Form 8606. For a Roth IRA, there are no taxes.

That was going to be my next question, who tracks this. Thanks

User avatar
Earl Lemongrab
Posts: 2146
Joined: Tue Jun 10, 2014 1:14 am

Re: Tax on IRA withdrawls

Postby Earl Lemongrab » Mon Mar 20, 2017 10:33 am

That's generally not recommended unless you can convert the non-deductible contributions to Roth fairly soon.
This week's fortune cookie: "You will enjoy doing something spontaneous this weekend." Apparently that meant working on a dead PC, but I didn't enjoy that much.


Return to “Investing - Theory, News & General”

Who is online

Users browsing this forum: BeBH65, columbia and 61 guests