Post tax dollar treatment in RMD withdrawal
I have post-tax dollars invested in my IRA and would like to know how NOT to pay taxes on them when I withdraw my first (and ongoing if necessary) RMD this year. Or – if I have to pay on everything up front, how do I claim credit for the post-tax dollars when I file my return next year for this tax year (2008)?
Permalink Submitted by Edward Czapor on Wed, 2008-01-09 14:56
You file Form 8606 with your tax return which calculates the taxable and nontaxable portions of your distribution. This is based on a ratio of your after tax nondeductible contribution basis to the total value of all IRA’s. You cannot selectively withdraw only post tax dollars and pay no tax. You should have filed a Form 8606 for each year there was a nondeductible contribution to establish and track your post-tax basis. If you did not, you can and must file a form for each year to establish basis.
Individual forms can be filed on a stand alone basis for each year without amending your return.