Form 8606

Forum|Forum|1 year ago
February 13, 2025
1 reply
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From 8606

I have a total basis now in a traditional IRA of $19,500 on line 2 & 3 that will be carried forward to 2025 tax return.

I am 75 years old and receive RMD once a year now.

I have filed form 8606 every year that there was a non-deductible contribution into the IRA.

I have copies of those 8606 forms for the years that there was a non-deductible contribution.

At present my RMD is around $7,000 per year and TurboTax calculated the RMD correctly for the previous and future year’s RMD

The plan for 2025 is to take the combined total of RMD $7,000 + the $19,500 basis line #3 on form 8606 for a combined total of $26,500

The question???

The Basis $19,500 not taxed.

The $7,000 RMD is taxed

TurboTax

8606 doesn’t address this type of transaction

DavidD66

Form 8606 does not address that type of Distribution becuase that type of transaction is not allowed. When you take a distribution from an IRA with both pretax and after-tax (non-deductible) funds, the distribution is part pretax and part after-tax. Let's say you have an IRA with a total balance of $100,000, and your basis in the IRA is $19,500. Any distribution you take from the IRA will have taxable component (80.5%) and a non-taxable (19.5%) component. If you take a distribution of $7,000 to meet your RMD, then $5,635 will be taxable and $1,365 will be non-taxable. You cannot take a distribution that is only after-tax (non-deductible). If you take another distribution of $19,500, then $3,802 will be non-taxable and $15,697 will be taxable.

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