Retirement tax questions

I don't know if you have the right idea about basis.

 

Your plan might track your costs; for example, your plan might show contributions of $40,000 and total current value of $100,000.  But that is not basis in a traditional IRA.  

 

Basis in a traditional IRA ONLY comes from making non-deductible contributions, which must be tracked and reported on form 8606.  And in fact, any basis number from your IRA custodian is worthless in this context because they don't get copies of your tax return and they don't know whether or not you took a deduction.

 

In other words, if you contributed $35,000 that was deductible, $5000 that was nondeductible, and the account is now worth $100,000, your basis for taxing purposes is $5000 only, not your overall contributions.

 

With that in mind, do your form 8606s accurately track your non-deductible basis?

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