After tax contributions in IRA – how do you calculate RMD
After tax contributions included in 401K not separated when rolled over into IRA. Institutions refuse to correct. …. Need to calculate RMD – If the after tax contributions are included in required RMD I will be paying taxes on the money twice!!!!! 1099R sent to myself and IRS confirming the after tax contributions. Is the 8606 the form used to calculate the RMD to include or prorate the after tax monies in calculating the basis amount?
IRS claims that the after tax contributions are only taken into account AFTER RMD is distributed and then calculated on 8606. Another agent in the call center claimed that the RMD is manually calculated PRIOR to RMD calculation and prorated out each and every year and the basis amount is reduced on line 14. Very confusing and the error could be costly. Because I’m required to take distribution this year, recouping the after tax contributions will take until I’m 95 years old.
Permalink Submitted by Alan - IRA critic on Tue, 2016-03-22 02:24
See your other thread. Add the after tax portion of the rollover to line 2 of the 8606 for the first distribution after the rollover. That eliminates any double taxation. You will need to file the 8606 for every year to allow the pro rate calculation to reduce the taxable portion. You are correct that the after tax money is only required gradually and pro rating will have to be done each year until the IRA is either converted or drained. But this is easily done if you use the same tax program of preparer every year because the tax program will take line 14 of the prior year 8606 and import it to line 2 of the current year 8606.