Question

After tax and taxable funds comingled by bank when converting from a 401k to an Ira

Forum|Forum|4 years ago
April 3, 2022
1 reply
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In 2011 I rolled over a 401k administered by one institution into a IRA account administered by another institution. The 401k institution co-mingled taxable and after tax funds and sent a single check to the IRA institution. The check clearly showed the amount of the after tax funds however the IRA institution did not note that the funds were comingled and deposited the entire amount into an IRA account. Now that I wish to withdraw funds I have to pay taxes on funds that I previously paid taxes. What can I do

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A

AnnetteB6

If you have records to show the amount of pre-tax and after-tax money that was rolled into the IRA, then you will enter the after-tax amount as the basis of the IRA.

When you take a distribution from a Traditional IRA and you enter the Form 1099-R into your return, one of the follow-up questions is whether you made and kept track of non-deductible contributions. You would answer 'yes' to that question. Then, there should be an option to let TurboTax help you figure out the basis of the IRA. Choose that option.

One of the questions in the section where you are determining the basis of the IRA will be a list of check-boxes, including one for transferring money from an employer's retirement plan in a previous year. Checking that box and answering the next questions will allow you to enter the after-tax contributions to the retirement plan. You will also be required to enter a short explanation for this adjustment to the basis of the IRA.

This will allow the taxable portion to be calculated correctly.

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