When you have basis in nondeductible traditional IRA contributions, the year-end value of your traditional IRAs is necessary to accurately prepare Form 8606 to determine the taxable amount of a traditional IRA distribution. Until the value is entered, TurboTax assumes a $0 year end value and the calculation produces an inaccurately low taxable amount.
The year-end value in traditional IRAs is also needed if you have an excess contribution in your traditional IRAs. The 10% penalty is calculated on the amount of the excess or on your year-end balance, whichever is less.
