Thanks for providing further clarification.
What you have explained now makes sense in that the non-deductible contributions only come into play when I report a distribution from the IRA. Unfortunately in my case, I did a direct transfer from the Fidelity IRA to the Insurance company to pay the premium. It was considered a qualified transfer - not a distribution.
In retrospect, I should not have used the IRA to fund the premium, given that it included after-tax dollars. I should have used my Rollover IRA to fund the premium.
I actually compounded my error when I merged the remaining balance in my IRA with my Rollover IRA for simplicity - completing forgetting that the IRA included after-tax dollars.
You have been a big help with your explanation. Fortunately, my basis percentage is only 15 percent, given the growth of the IRA.
Thanks again.
