Re: Tax on IRA Withdrawals

From: Rich Carreiro <rlcarr@animato.pn.com>
Subject: Re: Tax on IRA Withdrawals
Date: Wed, 10 Jun 1998 18:43:36 -0400

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>I'm 63 years old and have a regular IRA account (from my yearly
>contributions) and an IRA account (made up of my 401(k) rollover).
>
>The way I understand it, the taxable portion of IRA withdrawals are
>figured from 8606 information.  Also, I believe 8606 information does
>not include rollover information.

Well....sorta.  Form 8606 serves two purposes:
(1) To track the total of non-deductible contributions.
(2) To compute the taxable part of a withdrawal from *any* traditional
    IRA account when *any* non-deductible contribution has
    been made to *any* traditional IRA account.  Remember, for
    almost all tax purposes all your IRA accounts are aggregated
    into a single IRA.

It is true that with respect to (1), 8606 has no "rollover information",
but with respect to (2) it most certainly does -- namely the total value
of *all* traditional IRA accounts.

>Therefore is it true that withdrawals from my regular IRA have a
>different tax calculation than withdrawals from my rollover from 401(k)
>IRA account?

Absolutely not.  The ratio between the non-taxable part of a withdrawal
and the total withdrawal (no matter what traditional account the withdrawal
came from) is the same as the ratio of total remaining non-deductible
contributions to the total value of all traditional IRA accounts.

Form 8606 will lead you through all this.

Rich Carreiro
rlcarr@animato.pn.com
P5-100/RedHat Linux 4.1




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