Solved: For the past 3 years I have made after-tax contributions to my ROTH IRA. Last year I had to take a $4500 disbursement. That lowered my refund by $2300. Is that right?
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nathan3
New Member

For the past 3 years I have made after-tax contributions to my ROTH IRA. Last year I had to take a $4500 disbursement. That lowered my refund by $2300. Is that right?

According to TurboTax, the penalty on the distribution is ~$450, but my refund went down $2300. Not sure why this would happen, since the contributions are all after-tax. Am I just claiming the distribution incorrectly?
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Accepted Solutions
dmertz
Level 15

For the past 3 years I have made after-tax contributions to my ROTH IRA. Last year I had to take a $4500 disbursement. That lowered my refund by $2300. Is that right?

Be sure to click the Continue button on the Your 1099-R Entries page and, when asked, enter the amount of Roth IRA contributions you made prior to 2017 (minus the amount of any prior distributions from your Roth IRAs).  Also make sure to enter under Deductions & Credits any Roth IRA contribution you made for 2017.  TurboTax will prepare Form 8606 Part III to calculate the taxable amount of your Roth IRA distribution.  If your distribution was less than your net Roth IRA contributions, the taxable amount will be zero and there will be no tax or penalty on the distribution.

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5 Replies
dmertz
Level 15

For the past 3 years I have made after-tax contributions to my ROTH IRA. Last year I had to take a $4500 disbursement. That lowered my refund by $2300. Is that right?

Be sure to click the Continue button on the Your 1099-R Entries page and, when asked, enter the amount of Roth IRA contributions you made prior to 2017 (minus the amount of any prior distributions from your Roth IRAs).  Also make sure to enter under Deductions & Credits any Roth IRA contribution you made for 2017.  TurboTax will prepare Form 8606 Part III to calculate the taxable amount of your Roth IRA distribution.  If your distribution was less than your net Roth IRA contributions, the taxable amount will be zero and there will be no tax or penalty on the distribution.

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nathan3
New Member

For the past 3 years I have made after-tax contributions to my ROTH IRA. Last year I had to take a $4500 disbursement. That lowered my refund by $2300. Is that right?

Thanks for the help! I did see the section about prior IRA contributions, but was confused by it. The question asks what contributions made prior to 2017 remain in the account. The $4500 I withdrew was all that I had contributed ($500 in 2015, $2000 in 2016, and $2000 in 2017). So the only thing CURRENTLY remaining in the IRA is interest earned. Is the question simply asking what contributions did I make prior to this year, regardless of the disbursement that I received?
dmertz
Level 15

For the past 3 years I have made after-tax contributions to my ROTH IRA. Last year I had to take a $4500 disbursement. That lowered my refund by $2300. Is that right?

For better clarity, I should have said "minus any distributions made in years prior to 2017."   Do not subtract your 2017 distribution when determining your net basis from prior years.  If your 2017 distribution is your first distribution, your net basis for years prior to 2017 is $2,500.
dmertz
Level 15

For the past 3 years I have made after-tax contributions to my ROTH IRA. Last year I had to take a $4500 disbursement. That lowered my refund by $2300. Is that right?

I've corrected the comment above to say that your basis is $2,500 under the assumption that your contribution *in* 2017 was *for* 2017 and that you will be entering your $2,000 contribution for 2017 under Deductions & Credits.  If the contribution in 2017 was instead for *2016*, your basis for years prior to 2017 is $4,500 and you have no contribution to enter for 2017.
nathan3
New Member

For the past 3 years I have made after-tax contributions to my ROTH IRA. Last year I had to take a $4500 disbursement. That lowered my refund by $2300. Is that right?

Excellent. Thanks again! As I said, the wording that was confusing in the question was "contributions that remain" because the contributions do not remain currently, as they were withdrawn in 2017, but they remained prior to 2017. I think I've got it now. Thanks again for all of the help!
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