Non deductible IRA distribution

Collapse
X
 
  • Time
  • Show
Clear All
new posts
  • patavid
    Junior Member
    • Jan 2012
    • 12

    #1

    Non deductible IRA distribution

    If a taxpayer makes non-deductible contributions to a traditional IRA and subsequent
    qualified distributions are made, is it the custodian's responsiblity to include the nontaxable amount on the 1099-R? ( I really don't know how they could know this in all cases). If not, how is the taxable amount determined. Any references would be appreciated. Thanks in advance. I never had a client make non deductible IRA contributions that I know of.
  • FEDUKE404
    Senior Member
    • May 2007
    • 3649

    #2
    Form 8606

    ...is the answer.

    (And the same form should have been filed "along the way"....)

    FE

    Comment

    • KBTS
      Senior Member
      • Nov 2005
      • 564

      #3
      The custodian has no way of knowing if there have been non-deductible contributions, so the 1099-R will probably list the same amount in box 1 & 2 with the "taxable amount not determined" box checked. The client may or may not have been filing Form 8606 with their return each year to show the non-deductible contributions they made. You will need to know this amount along with the FMV of all IRAs at 12/31/11. You will then use Form 8606 to determine how much of the distribution is taxable and how much is a recovery of basis. I think the instructions for the 8606 explain pretty clearly how to do this - now getting your software to do it might be another issue.

      Comment

      Working...