How to Withdraw After-Tax Money From a Traditional IRA

Typically, people deduct contributions made to a traditional IRA. However, some people who are covered by an employer-sponsored retirement plan cannot deduct their contributions because their income is too high or simply choose to make an after-tax contribution. When these contributions come out of the traditional IRA, they are not counted as taxable income. However, taxpayers cannot choose to only withdraw after-tax contributions. Instead, the after-tax contributions come out as a percentage of your total withdrawal. You must also make sure that you properly report these distributions on your income taxes.

Things You'll Need

• Form 1040 or 1040A

Instructions

1. Request a distribution for your traditional IRA from your financial institution. You will receive a form 1099-R that shows the taxable and nontaxable portion of the distribution at the end of the year.

2. Report the taxable portion, found in box 2 of form 1099-R on line 15b of form 1040 or line 11b of form 1040A.

3. Subtract the taxable portion of your traditional IRA distribution from your total IRA distribution, found in box 1 of your form 1099-R, to find the nontaxable portion of your withdrawal. For example, if you had a total distribution of $5,000 and $3,500 is taxable, you would subtract $3,500 from $5,000 to get $1,500.

4. Report the nontaxable portion of your withdrawal on line 15a of form 1040 or line 11a of form 1040A.

References

• Internal Revenue Service: Publication 590

Resources

• Internal Revenue Service: Form 1040
• Internal Revenue Service: Form 1040A
• Internal Revenue Service: Form 1099-R