You are not allowed to withdraw only your post tax contributions.
It's best explained by example. Let's say you have a $4,000 balance in all your existing traditional IRAs on 12-31-22 and earlier in 2022 you took out $6000. Your balance for the year was $10,000 (the 4000 on hand at year end plus the 6000 distribution). That balance consist of $3,000 in deductible contributions, $2,000 in previous non-deductible (post tax) contributions and $5,000 in earnings (interest, dividends & capital gains). Your basis, in all your IRAs, is $2,000. Only 20% of the $6000 distribution ($1200) will be tax free . TurboTax will divide that $2,000 basis by the $10,000 balance to arrive at the 20% tax free ratio. $4,800 of the distribution will be taxable. This calculation will be shown in Part I of form 8606.
TurboTax will keep track of your basis, now $800 (2000 -1200 = 800), on form 8606, going forward.
In the example, what if you only withdrew the $2000 after (post) tax (non deductible) portion of the balance. You're not allowed to do that (claim the entire distribution as basis). The calculation would go like this: You have a $8,000 balance in all your existing traditional IRAs on 12-31-22. Your balance for the year was $10,000 (the 8000 on hand at year end plus the 2000 distribution). That balance consist of $3,000 in deductible contributions, $2,000 in previous non-deductible (post tax) contributions and $5,000 in earnings. Your basis, in all your IRAs, is $2,000. Only 20% of the $2000 distribution ($400) will be tax free . TurboTax will divide that $2,000 basis by the $10,000 balance to arrive at the 20% tax free ratio. $1,600 of the distribution will be taxable.
