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Retirement tax questions
No, you cannot only withdraw the after-tax funds out of the traditional IRA. If you have a mix of pre- and after-tax then the pro-rata rule applies. This means that with each distribution/ conversion you will have a taxable and nontaxable part. The nontaxable part is calculated on Form 8606.
TurboTax will handle this for you, all you need to do is enter the Form 1099-R and then answer a few questions about the basis and the value of all traditional/SEP/SIMPLE IRAs on the end of the year. Then TurboTax will fill out Form 8606 for you.
If you withdraw from your traditional IRA before 59 1/2 and have a mix of pre-tax and after tax then the 10% early withdrawal penalty applies on the taxable part unless you have an exception.
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March 12, 2025
4:35 AM