The taxable amounts of distributions from a 401(k) and from a traditional IRA are required to be calculated independently. Unlike a 401(k) where the plan administrator has all of the information necessary to calculate and report the taxable amount of a distribution on the date of the distribution, without an audit the IRS has no way of knowing when particular transactions in your IRAs occurred. The regulations therefore require that the taxable amount of a traditional IRA distribution be calculated as if the distribution occurred on December 31 of the distribution year, taking into account the traditional IRA balances on that date.
