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Level 1

Question

How do i reduce IRA total basis

Forum|Forum|4 years ago
March 30, 2022
1 reply
6 views

I made too high of a contribution to my Traditional IRA last year and ended up with a Total Basis for the difference. I'd like to rectify that this year. what do I do to remove this from my reporting requirements?

TurboTax Deluxe Online

Level 15

To verify, you made a traditional IRA contribution for 2021 but because of your income the contribution was not deductible and therefore you have a basis reported on Form 8606.

You have the option to ask your financial institution for the return of your contribution until the due date if you didn't take the deduction.

If you want to keep the contribution then you will have to track your basis since you cannot remove only your basis from the traditional IRA when you have pre-tax funds. When you have pre-tax funds and basis in a traditional IRA then the pro-rata rule applies and each distribution will have a taxable and nontaxable part.

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Level 15

Request an Extension of time 4868.

You will have till Oct 15 to tell the custodian you want to have that contribution revoked and make it happen.

That's all, as long as you did not take any deduction for the money.

If you did file and take a partial deduction, you'd have to amend.

Note: you can't just pull the money yourself. That would cause severe problems.