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Retirement tax questions
I went back and looked at the MA instructions for Sched X & Y so I could try to get a feel for the full context. I think I now get it. That section seems to apply to an IRA or Keogh plan in which you have made non-deductible contributions over a period of years. Let's say you have $50K in the plan and your non-deductible contributions totaled $25K. That $25K has already been taxed. Let's say you've previously withdrawn $15K and this year you withdraw $5K. Since you can withdraw a total of $25K of your non-deductible contributions and only previously withdrew $15K, then the $5K withdrawn this year is non-taxable. So in that context, it makes sense to keep track of all the non-deductible contributions made and all the funds withdrawn.
It doesn't make a lot of sense in the Backdoor Roth situation where every year you make a non-deductible contribution (i.e., funds already taxed in MA), then convert those funds to Roth. I will continue to leave the "Total Distributions Previously Received" blank and hope this doesn't trigger an audit. If it does, it seems like it should be easily explainable.
It doesn't make a lot of sense in the Backdoor Roth situation where every year you make a non-deductible contribution (i.e., funds already taxed in MA), then convert those funds to Roth. I will continue to leave the "Total Distributions Previously Received" blank and hope this doesn't trigger an audit. If it does, it seems like it should be easily explainable.
‎June 7, 2019
4:59 PM