On Sep 7, 4:27 pm, I wrote:
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A little dyslexic or I just have Pub 950 on the brain. Anyway,
obviously I meant Pub 590 -- if I typed that correctly this time :-).

joetaxpayer wrote:

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I find I am perversely both draw to and repulsed by that... ;-)

-Mark Bole

On Sep 7, 11:11 am, joetaxpayer <joetaxpa...[at]nospam.com> wrote:
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Amen to that! I did get my answer straight-forwardly from IRS Pub
950. There is no disadvantage to comingling because in computing the
nontaxable portion of IRA distributions during any one tax year, Form
8606 looks at the total basis (post-tax contribution) and total FMV of
all IRAs.

Morever, as it turns out, I was wrong that the contribution being post-
tax. It was 24 years ago, and my records from then are sketchy. But
based on the amount of the contribution and my own style, I am sure I
took the tax deduction (adjustment to income). In any case, based on
the Form 8606 computation, I'm talking about a fraction of a percent
that would be considered nontaxable. It might not even be worth the
trouble, if I were worried about having sufficient documentation to
support my claim in an audit. (But I'm not worried.) In summary:
much ado about nothing.

Mark Freeland wrote:
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Answers, no matter how right, run the risk of the nit-pick,
clarification, and tangent regardless of original point. OP asked about
mingling pre and post tax IRA deposits. As I was writing my reply, that
there's no benefit to keep seperate, and 8606 tracked non-deducted
money, along with the note that IRS-wise, you have one IRA, which can be
in many accounts, it occurred to me we had the recent discussion
regarding the 60-day withdrawal and replacement cycle. And, in fact,
since the 60-day rule is 'per account' one could object to my saying
that there is no consequence at all to combining to one account. Each
account offfers its own 60 days.
If it's not a loan, and not borrowing, and 'bozzle' is already reserved
for company matching funds, what shall we call it?

By the way, I agree with you, 100%. There are few circumstances where it
ever makes sense, but of course you can contrive what you will. Someone
has a mismatch on income and an expense. Say a closing on new house and
sale on the old, and having a defined, short need to float the money.
Perhaps a chance to defer a huge bonus check from December to January to
shift the income, but the need to to tap the IRA for some December
bills. Whatever. In the end, the risk is high, and potential gain may
not be worth it. I was just trying to provide a complete reply to the OP.

JOE

"joetaxpayer" <joetaxpayer[at]nospam.com> wrote in message
news:roOdnXfR84tNrnzbnZ2dnUVZ_sCtnZ2d[at]comcast.com...
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IRS Pub 590 is clear on returning money to the same account:
"You can withdraw, tax free, all or part of the assets from one traditional
IRA if you reinvest them within 60 days in the same or another traditional
IRA."
http://www.irs.gov/publications/p590/ch01.html#d0e3514

But I'd be very leery of calling it "borrowing" from one's account. Since
it is a withdrawal (distribution) and rollover, this can be done only once
per year per IRA. This important restriction is glossed over if one thinks
of it as borrowing from oneself.

Mark Freeland
BnetOnewsX[at]sbcglobal.net

Dave Dodson wrote:

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I have always understood you are permitted to return it to the same
account. I'm sorry I refered to this at all, the OP's question had
nothing to do with this, and, eliminating the loan referrence, my answer
would have been pretty complete. Other sources call it a 'loan', but
they are using the term very loosely, as the IRS is clear that one's IRA
cannot be pledged as a collateral for a loan. Perhaps 'borrow from your
own account' is better phrasing. This was discussed in a thread about a
month back, think we concluded same account is ok, there.
JOE

On Sep 7, 12:21 am, joetaxpayer <joetaxpa...[at]nospam.com> wrote:
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Well, that wouldn't be a loan. You can take a distribution, and then
have 60 days to complete a rollover. I do not know if you can put the
money back in the same fund, or if you have to transfer it to a
different custodian (e.g., out of Vanguard, into Fidelity). Do you,
Joe?

Dave

Dave Dodson wrote:
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Dave - can't one borrow money from a given account for up to 60 days? My
choice of words was poor, maybe I should have avoided the word 'loan'?
I was just trying to make the point that in this case multiple accounts
are treated differently than the single account holding the entire IRA
balance. Each account has its own 60 day rule.
JOE

On Sep 6, 10:13 pm, joetaxpayer <joetaxpa...[at]nospam.com> wrote:
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Just one kind correction in what Joe said: You can't use your IRA as
collateral for a loan; doing so causes the loan amount to be
considered a distribution.

Dave

nomail1983[at]hotmail.com wrote:
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I hope I have a reputation for 'kind'. Another kind poster set me
straight here, when I answer an IRA question. For traditional IRAs, you
only have one IRA, whether it's in multiple accounts is a separate
issue, and may or may not have other impact (e.g. loans are per account,
not totaled across all). Distributions are aggregated across all IRAs,
i.e. you must pro-rate pre-tax/ post tax deposits to determine amount
taxable. Form 8606 tracks post tax deposits for your IRA accounts.
Pretax deposits and all growth is taxable at withdrawal. Conversion to
Roths are prorated as are withdrawals. I either covered this completely,
or went on too long and confused you.

The separate accounts don't help because all the growth is taxable
anyway. It's form 8606 that tracks post tax deposits. (that was the
simpler answer).

JOE
www.blog.joetaxpayer.com

I know I need to study IRS Pub 590, but I am hoping some kind
soul will offer some educated insights ....

As I recall, it is best to avoid comingling pre- and post-tax
contributions in IRAs. I think it simplifies things when determining
the tax on distributions. Is that right?

Or does the IRS require that you prorate the taxability of
distributions across all IRAs, independent of the ratio of pre-tax
and post-tax contributions in each IRA that funds were actually
distributed from?

Assuming that I am correct about perferring to keep pre- and
post-tax contributions in separate IRAs, is there anything I can
to correct the situation if I inadvertently comingled them?

I am talking about effecting a correction, if possible, within a few
days after I pushed the button to consolidate the separate IRAs.

(I forgot why I was keeping them separate in the first place, and I
decided to consolidate two IRAs that I have at one brokerage firm.)

If I simply create a new IRA and fund it with the amount of the
post-tax IRA before consolidation, would that be sufficient.

It is not clear to me how the IRS, decades later, know how much
of an IRA was funded with pre-tax contributions and how much
with post-tax contributions. But if it matters, the pre-tax IRA,
which now includes some post-tax contribution and its earnings,
was designated as a Rollover IRA when the account was opened.

(I'm not sure that designation has stuck with the account since
then. I need to check records.)