"Ivan Erwin" <ierwin[at]myexcel.com> wrote:

- quote -

Sure it can. If you're covered by a qualified plan at work
and your MAGI is above a certain threshhold, you can't
deduct conventional IRA contributions; if you make
non-deductible contributions, they're after tax, and reduce
the tax you pay when you later withdraw (so that you're not
taxed twice).

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

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Ivan Erwin <ierwin[at]myexcel.com> wrote:

- quote -

Yes, you report the after-tax traditional IRA contributions
on Form 8606.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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A.G. Kalman wrote:

- quote -

My recollection, based on the 401k plan documents, is that
after-tax contributions to 401k are treated as a separate
account (I con't remember the code section - perhaps 401a);
that, back when the 401k (defered salary) plan limit was
$10,000, the total 401k+401a limit was $30,000 or 25% of
salary, whichever is less (I think it may now be $40,000 or
100% of salary); and that all 401a accounts, combined can be
treated in the same mannar as all IRAs -- if you close all
of them, and have a loss, it's deductible -- even if you
still have 401k's open.

But I could be wrong.

I'm not convinced that the ONLY individuals who make
non-deductible contributions are likely to be "highly
compensated" -- my salary is over $95,000, and I'm NOT
considered "highly compensated".

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"wileyz" <a_dragon_99[at]yahoo.com> wrote:

- quote -

I'm not a total expert but I have a 401k and regular and
Roth IRA's and have done some studying.

The quick answers that I'm reasonably sure about:

Go to www.irs.gov and look at Publication 575, Pension and
Annuity Income, and Publication 590, IRA's. There are
probably others.

The good/bad news is that what happens "inside" a 401k or
IRA has no tax consequences. Trade as much as you wish.
Forget gains, losses, wash rules, etc. There is no reporting
of transactions for tax purposes. The only thing that
matters is a taking a distribution. A distribution is
generally simply added to income for Federal and state
income tax purpose, except for a Roth IRA which is not be
taxable when the proper rules are followed. (My state of
Colorado excludes a fairly generous amount of
retirement/pension income from state income tax.)

Whether the retirement account goes from $1,000,000 to
$1,000 or vice versa has not tax consequences except for the
amount that is available for distribution. There are no
gains or losses for tax purposes.*

Where I'm not so sure:

I believe that a 401k account allows for "after tax"
contributions. (I never made any of those.) This would give
a portion of the account a basis. The plan administrator
should keep track of "before tax" and "after tax"
contributions. Distributions then have to be accounted for
as "before tax" and "after tax" but I can't help much there.
Hopefully, the publications and the 1099R Forms from the
plan administrator for distributions will take care of that.

A Roth IRA is all "after tax." I don't know if a
conventional IRA can have "after tax" contributions and
therefore, a "basis."

If you didn't made "after tax" contributions to your
accounts, there is no "basis."

Hope this helps.

Ivan Erwin

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"wileyz" <a_dragon_99[at]yahoo.com> wrote:

- quote -

The answer will depend on the type of money you put in (401K
& IRA). If you deducted the payments when you put them in,
then you have no basis and will pay ordinary income tax on
all the money when you take it out.

If you funded the accounts with AFTER tax dollars you may be
able to deduct some of all of the loss assuming you meet the
qualifications. One of the things you must do, as I recall,
is to liquidate ALL of your retirement accounts.

Gene E. Utterback, EA

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wileyz <a_dragon_99[at]yahoo.com> wrote:

- quote -

That's what this group is for,

- quote -

If you have contributed any after tax moneys to the 401k you
can take out that after money separately and it will not be
taxable.

If the total 401k has less than the after-tax money
contributed and you take a complete distribution of your
401k, the difference might be a taxable loss, claimed on
Schdule A Line 22.

Otherwise, your loss on value of the 401k means there is
less 401k funds to be distributed so less tax to pay when
you draw down the 401k. There is no loss to be declared.

- quote -

Well, if you have both after-tax and before-tax
contributions to your traditional IRA, you do not have the
ability to take only the after-tax amount. You use form
8606 to compute the portion of the IRA distribution that is
taxable.

And if you have after-tax contributions to your IRA and have
taken a complete distributon of the IRA, te difference
between your distributions and your after-tax contributions
is a schedule A Line 22 loss.

- quote -

No wash sales completely in your IRA and no capital gains or
losses either. There is an issue as to whether a loss in
your personal trading account and a purchase in your IRA is
a wash sale but I assume that was not your question. If it
was I'd say no wash sale but others will disagree.

- quote -

Pubs 590 and 575.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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"wileyz" <a_dragon_99[at]yahoo.com> writes:

- quote -

***********NO

- quote -

***********NO

- quote -

*********NO

- quote -

You may access these publications at http://www.irs.gov

Publication 560, Retirement Plans for Small Business
(SEP, Simple, and Qualified Plans)
Publication 575, Pension and Annuity Income
Publication 590, Individual Retirement Arrangements (IRAs)
Tax Topic 424, 401(k) plans
Tax Topic 558, Tax on early distributions from retirement
plans
Tax Topic 412, Lump-sum distributions

"Jack" - John H. Fisher - TaxService[at]aol.com
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=

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wileyz wrote:

- quote -

You only have a cost basis in a 401K if you make after-tax
contributions. Generally, the only individuals that you
find who have after-tax contributions are those who are
defined as highly compensated individuals. You only have a
cost basis in an IRA if you make an annual contribution you
can not deduct. Lastly, you may have a cost basis if you
roll over a balance from some other plan that has a cost
basis.

If you have a cost basis, then the only time you would get
an opportunity to take a tax deduction for a loss, is when
you liquidate the plan balance and the total amount you have
received over time is less than the cost basis. In the case
of an IRA, you would have to liquidate all IRA accounts.

- quote -

See above.

- quote -

Gains and losses inside an IRA are unreported.
Distributions from IRAs are ordinary income.

- quote -

IRS Pub 590 for IRAs and 575 for Pensions.
http://www.irs.gov/publications/index.html

--
Alan
http://taxtopics.net

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"wileyz" <a_dragon_99[at]yahoo.com> wrote:

- quote -

There is no basis in a 401(k). IRAs only have a cost basis
if you make non-deductible contributions.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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wileyz" <a_dragon_99[at]yahoo.com> wrote:

- quote -

No. That would be double-counting. You already got the tax
benefit when the $10K you contributed was excluded from your
income. The only tax benefit you get is that you pay tax
only on $5K, not on $10K, when you withdraw the money.

- quote -

Depends on the IRA. If you took an adjustment to income for
contributions to a Traditional IRA, then just as with the
401(k), you already got all your tax benefit, and you cannot
take a tax loss.

If you have a Roth IRA, or you have a Traditional IRA to
which you contributed after-tax income (you made a
contribution, but did not take an adjustment to income for
it), you have basis, and you can have a deductible loss if
you close all of your IRAs of the same kind (Roth or
Traditional). Such a loss is not a capital loss but a
miscellaneous itemized deduction.

- quote -

No. All your trades within an IRA have no tax effect. If you
lose money, there will be less money to pay taxes on when
you withdraw it.

If you trade the same security in a regular account and in
your IRA, whether the wash sale rule applies is a question
over which many electrons have been expended in argument
without a clear answer.

- quote -

For IRAs, see Publication 590. For 401(k)s, see Publication 560.

--
Chris Green

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a_dragon_99[at]yahoo.com (wileyz) posted:

- quote -

No.

- quote -

No.

- quote -

No.

Any IRA (Traditional, Roth, etc.) is, by definition, a
tax-sheltered creation. All activity which occurs during
the protected period is not subject to taxation.

Once you start withdrawing funds (normal, un-penalized
withdrawals can occur in the year one reaches age 59 1/2),
_that is when taxable events occur. And all distributions
from the IRA would be taxed at "ordinary" rates -- i.e., no
"capital gains" benefits.

- quote -

Pub 590 for IRAs. Pub 560 for 401K accounts (but note that
individual company plans will have governing rules, that may
differ in some respects.)

Bill

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"wileyz" <a_dragon_99[at]yahoo.com> writes:

- quote -

Nope. If you could, that would be double-dipping. You want
to get a tax deduction for putting money into the account in
the first place and then another deduction for selling at a
loss.

It doesn't work that way.

- quote -

Same answer.

However, if you've made *non-deductible* IRA contributions
and then close out all your IRAs, and the total money you
got back is less than the non-ded contributions put in, you
do get a misc itemized deduction for the difference. But
that has nothing to do with the investment performance --
only with how much money you got out compared to the non-ded
contributions put in.

- quote -

None. Also, all taxable IRA withdrawals are treated as
ordinary income, regardless of what form earnings took in
the account.

- quote -

Not within (since there are no cap gains and losses in an
IRA). But it is an open question as to whether or not a
purchase in an IRA can cause a loss sale outside an IRA to
be a wash sale.

- quote -

For IRAs see Pub 590.

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

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"wileyz" <a_dragon_99[at]yahoo.com> wrote:

- quote -

Generally, NO, as contributions are made tax-deferred. Your
cost basis is -0-

- quote -

Not unless the amount you get back is LESS than your cost
basis in the account. If you qualify, the loss is taken as a
Miscellaneous Deduction (subject to 2% of AGI limit) on your
Schedule A.

- quote -

Same answer. Loss only deductible if you have "basis" (i.e.
non-deductible contributions) in the account. In that case,
you should have filed a 8606 form at the time.

- quote -

Transactions within an IRA account do not receive capital
gains treatment, so short or long term is irrelevant. Same
with "wash sales". When funds are withdrawn from the
account, they are taxed as ordinary income.

- quote -

IRS Pub 590 (IRAs) and 575 (Pension plans)

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"wileyz" <a_dragon_99[at]yahoo.com> writes:

- quote -

Only if you made after-tax contributions.

- quote -

No. You've already deducted the $10K from your income.
When you withdraw the $5K you pay tax on it. Net result
over the life, a $5K deduction.

- quote -

No.

- quote -

An IRA is a tax-exempt entity. Capital gains and losses and
the wash sale rule are irrelevant.

- quote -

590 for IRAs and 575 for 401(k)'s.

Phil Marti
Clarksburg, MD

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- quote -

Only if there is after tax money in your IRA. Then it would
be prorated.

- quote -

Same answer, only if you have basis in the IRA.

- quote -

Nope, all IRA (and 401K) money is ordinary when it comes out
and does not change character inside the investment vehicle.

Helen, EA in PA
I DID IT!
50 miles, 3 days, 1 cause - Multiple Sclerosis Challenge Walk for the Cure
October 1 to October 3, 2004

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Forgive me for asking some very basic questions.

Is there a cost base for 401K? Suppose over the years I
contributed $10K into 401k, when I retire and start to be
eligible to receive money, my investment was so bad that
there is only $5K in the account. Can I take that as a loss
for tax purposes?

The same question for IRA account, any differences?

If I do day-trading using my IRA account, is there a
difference between short term and long term gain/loss? Will
the Wash sale rule still apply in an IRA account?

Can someone point me to the IRS publications that details
the rules for IRA and 401s?

Thanks.

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