Question

Should I withdraw my total rmd from my traditional ira that includes after tax dollars rather than taking some or all from my ira with all pre tax dollars ?

Forum|Forum|4 years ago
April 12, 2022
1 reply
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TurboTax Premier Online

It is not an option at all.

Part of the RMD will be the basis, and part of it will be pre-tax dollars. Distributions from Traditional IRA are treated differently from Roth IRA. Roth IRA distributions follow a first-in, first-out basis. The contribution comes out first, then earnings after all contributions are out.

But for Traditional IRA, if you have deductible and nondeductible contributions, the calculation gets a little more complicated.

First, you will need to figure out how much of your account is made up of nondeductible contributions. Take the total amount of nondeductible contributions and divide by the current value of your traditional IRA account. This is the nondeductible (non-taxable) portion of your account:

nondeductible portion = nondeductible contributions / account value.

Next, subtract this amount from the number1 to arrive at the taxable portion of your traditional IRA.

taxable portion = 1 - nondeductible portion.

Finally, multiply this number by the amount you withdrew from your traditional IRA. This is the taxable amount of your withdrawal.

taxable amount = (taxable portion) x (withdrawal amount).

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G

gtakerchanceAuthor

Thanks for the feedback. That was in line with the way I thought the traditional account works with the cost basis. The second account is not a roth account but a regular ira (no cost basis). That's why I was favoring withdrawing everything from the traditional because the total taxes withheld would be less.