dmertz
Level 15

Retirement tax questions

All of your traditional IRAs are treated in aggregate for this purpose.  Your basis in nondeductible traditional IRA contributions does not reside in any particular one of your traditional IRAs.

 

If you had a total of $1,300 in distributions and Roth conversions and your year-end balance in traditional IRAs is $8,750, the nontaxable amount of the $1,300 is:

 

$1,300 * $1000 / ($1,300 + $8,750) = $129 (rounded)

 

leaving  $1,171 as taxable and leaving $871 of basis in nondeductible traditional IRA contributions in your traditional IRAs to be applied to future traditional IRA distributions.

 

You latter calculation is almost correct except that the first part of your calculation omits the effect of the $50 of investment gain.  The nontaxable portion is is 9.95%, not 10%.

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