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June 6, 2019

If you did not pay any money into this retirement account then all of it is taxable.  If you paid money into this retirement account that was "pre-tax" or "before taxes" then all of the distribution is taxable.

If you know that you paid "after tax" money into the account then you would have the opportunity to have a portion of all of your retirement payments tax free because you already paid tax on some of the money invested.  For this scenario you would need the record to show the amount of money that you put into the account that you already paid tax on.  This would be considered your cost basis of the retirement.

The Simplified Method can be used to determine the taxable amount. Turbo Tax will do this calculation for you.

Leave the box 2a of the 1099-R blank. In the ensuing questions, the taxable amount will be calculated based on your lifetime after-tax contributions (Box 9b) and actuarial calculations. Turbo Tax will help you do this- but, when entering the 1099-R, simply type it in as you see it. Your cost in the plan (Box 9b) is allocated to your lifetime distributions based on your age and retirement date.

You will be asked a series of questions about when you retired, your contract cost (9b), whether you are getting equal payments... your responses will help determine the taxable amount.

This process, the Simplified Method, can also be seen here: IRS Publication 575 Pension and Annuity Income

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