Tax on IRA withdrawls

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bob_m10
Posts: 104
Joined: Sat Feb 18, 2017 12:33 pm

Tax on IRA withdrawls

Post by 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 Would it be just the earnings or the entire amount that is withdrawn?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: 6078
Joined: Tue Feb 27, 2007 3:26 pm
Location: Cleveland, OH

Re: Tax on IRA withdrawls

Post by 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 Would it be just the earnings or the entire amount that is withdrawn?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: 104
Joined: Sat Feb 18, 2017 12:33 pm

Re: Tax on IRA withdrawls

Post by 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 Would it be just the earnings or the entire amount that is withdrawn?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

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Earl Lemongrab
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Re: Tax on IRA withdrawls

Post by 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.
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