Tax on stock sold to meet RMD
I sold some stock from my IRA to meet my annual RMD. How do I account for the original cost of the stock when I bought it as part of a non IRA company (GE Savings & Security) investment plan. I converted from that plan to an IRA after retirement.
Thanks!
Permalink Submitted by Alan - IRA critic on Mon, 2014-12-29 17:06
The original cost does not matter when you hold shares in an IRA. The distribution is fully taxable unless you made IRA non deductible contributions in the past or rolled over after tax money from an employer plan to your IRAs. Both of these situations are tracked on Form 8606. If you have more than one non Roth IRA, the non taxable % applies to all of these accounts. Otherwise, the distribution is fully taxable on line 15b of Form 1040. Remember, when you acquired the shares back in the GE plan, they were purchased either with pre tax money or from non taxable employer funds, so there is no double taxation in this situation.