sftydvr wrote:
- quote -

Here we have two different retirement plans and independent
of each other. So that gives you a clue as to what happens.
Only the 401K withdrawals will be divied up into taxable and
non taxable portions.

any withdrawals from the IRA will be totally taxable if and
when.

Cheer$,
Harlan Lunsford, EA n LA

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sftydvr wrote:
- quote -

Yes.

- quote -

Yes using the simplified method.

- quote -

No.

--
Alan
http://taxtopics.net

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Harlan Lunsford <lunstax[at]bellsouth.net> wrote:

- quote -

Greetings,

Here's a retirement savings situation. The retirement
savings of a person is in two parts. One is in a
traditional IRA and all taxable upon withdrawal. The other
part is in a 401K, (left and growing with a former employer,
but independently and professional managed). This account
has a small amount of after tax savings money in it (approx.
1%). These accounts have been kept separate.

The person is over 60 years old. If he starts taking funds
out of just the IRA, is it all taxable? If he starts taking
funds out of the 401K, does the taxable portion ratio come
into play for just this account? If he starts withdrawing
from both in the same year do the two account withdrawals
combine to impact the taxability ratio?

Thanks,
BC

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Harlan Lunsford wrote:
- quote -

A Quick clarification however.

If you have two or more accounts, you MAY pick and choose
which one from which to take a distribution. However for
tax purposes, it doesn't matter, the distribution is deemed
to have come ratably from all of them.

Hence I advise my clients who have multiple IRA's, to choose
the one paying the least amount of interest/dividends.

Cheer$,
Harlan Lunsford, EA n LA,
talking to himself; again

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Grenouil wrote:

- quote -

Not a cotton picking thing. You do figure the percentage,
and the distribution is considered to have come from each
IRA in the same proportion. IOW, you can't just pick and
choose.

Cheer$,
Harlan LUnsford, EA n LA

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"Grenouil" <grenouil7[at]bellsouth.net> wrote:

- quote -

You're assuming that the IRS cares which account you're
taking the distribution from. For tax purposes you only
have ONE IRA, and the tax on distributions is pro-rated
based on the tax basis of all contributions.

--
Barry Margolin, barmar[at]alum.mit.edu
Arlington, MA

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Grenouil wrote:

- quote -

Computation of the taxable portion of any IRA distribution
is based on the balance of all of your IRA accounts. Follow
the Form 8606 instructions. Your original assumption was in
error.

--
Alan
http://taxtopics.net

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"Grenouil" <grenouil7[at]bellsouth.net> wrote:

- quote -

You are reading correctly. No matter how many separate
"accounts" you have, you still have only ONE IRA for
withdrawals. Each withdrawal is considered to be pro-rated
between the deductible, non-deductible and earnings portion
of the overall IRA. You CANNOT preferentially just withdraw
the "non-deductible" funds and leave the "deductible" (read
"taxable") funds in the account.

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I have two IRAs, one funded with deductible, and one with
non-deductible contributions.

I want to take a distribution equal to the total amount in
the non-deductible IRA, and was assuming that I would only
pay tax on the value of this IRA distribution above my
'basis'. However, form 8606 line 6 indicates that I need to
divide the distribution by the value of ALL my IRAs at the
end of the year, and only that portion is non-taxable.

What am I doing wrong?

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