bo peep wrote:
- quote -

The basis is the total of the non-deductible contributions. You don't
have to keep track of it on an account by account basis, but only for
the totality of your ordinary (as opposed to Roth) IRAs. Thus, during
the accumulation phase of your life, all you do is add the amount of
non-deductible contributions for the tax year to the number on last
year's Form 8606. That's not very onerous, is it?

Dave

"bo peep" <cowartmisc1[at]yahoo.com> writes:

- quote -

First of all, one only has one IRA. Even if one has several
accounts, it's all one IRA for all tax purposes. So it makes
no difference if he keeps is deductible IRA contributions in
one account and non-deductible ones in another. The two
accounts get added together when he pays taxes on any
distributions.

Second of all, the keeping track of the basis is this:
One number. That's it. In total. Every year, if he
adds non-deductible contributions, that number goes up
by however much he added. That number is not tied to
any account - it's in total for the sum of all of his
IRA accounts. This is his "basis". (Folks who never
make non-deductible contributions have a basis of zero).

It's a little more complicated if/when he takes a distribution
from the IRA. He adds up the balances on all the IRA
accounts at the end of the year and divides his basis by
that total. The resulting proportion describes how much
of any distribution he takes is non-taxable (ie. return
of basis). It's a little more complicated if he both
made contributions and took distributions, and if he did
any kinds of conversions all in the same year.

But generally, the calculation is, in fact, trivial:
add a number to a single number that you simply have
to keep track of.

All of that said, none of this has anything to do with
whether one mixes "contributory" IRA accounts with
"rollover" IRA accounts. (It used to be important to
keep those types of IRA accounts separate for the sake
of being able to rollover back into a 401k in the future -
it's no longer necessary).

But note that no matter how many accounts one has, one
only has one IRA. (and, possibly, additionally, one
Roth IRA - which also may be composed of multiple accounts).



--
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No HTML in E-Mail! -- http://www.expita.com/nomime.html
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bo peep wrote:
- quote -

To repeat what Rich said. The IRS doesn't care if they are in the same
account or different accounts. Any withdrawl from any IRA has to
consider ALL contributions to ALL IRAs. The OP already has to make the
calculations. Puting them in the same acount won't make a bit of
difference.

Rich Carreiro wrote:
- quote -

The OP is contemplating mixing deductible and non-deductible funds in
the same IRA. He would have to keep track of both his deductible and
non-deductible basis. The instructions for Form 8606 state "Keep track
of your basis to figure the nontaxable part of your future
distributions". While that might not seem complicated to the
professionals who frequent this group, it *would* be complicated for a
mere mortal like me, and I would not be able to attempt it unless I
kept permanent, detailed records of my transactions.

John Cowart

"bo peep" <cowartmisc1[at]yahoo.com> writes:

- quote -

What "detailed records" and "complicated calculations"
are you referring to? I presume you're not referring
to Form 8606, since the calculations on that form
*are exactly the same* whether or not you combine
the accounts.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

bo peep wrote:
- quote -

The calculations when you start taking distributions are the same
whether you combine them or keep them separate. You have to fill out
IRS Form 8606 and submit it with your income tax return. If you've
never made non-deductible IRA contributions, there is no need for
detailed records and the calculations are not complicated.

Dave

bo peep wrote:

- quote -

Keeping the pre and post tax (as John stated) is the right thing to do.
Only thing I'd add - you no longer need to keep pre-tax IRA 401(k)
rollovers seperate from pre-tax IRA that were always IRAs.
JOE

morpheus777[at]gmail.com wrote:
- quote -

It's OK if you enjoy keeping detailed records and doing complicated
calculations when it comes time to withdraw the funds.

Will you ever be working at another job with a 401k plan? If so, you
might want to keep the rollover funds separate so that you have the
option to roll them over into the new 401k.

John Cowart

I currently have a Rollover IRA with Fidelity funded by 401K
contribution from past employers. I also have a traditional IRA with
E*Trade funded by after-tax contributions. I was wondering if it makes
sense to combine Etrade into Fidelity to create a single IRA account.
It would simplify management and investment. Or, is it not advisable to
mix pre-tax and after-tax contributions?