Tax Year Prior to 2020: I have $20000 in an IRA ($13000 are 8606 funds). If I withdraw the $13000 out of the $20000 pool first can I declare this deduction totally as a non-taxable deduction?

[JulieC14]

It depends.  See more information from the IRS on non-deductible contributions below.

• Distributions from your traditional IRA may be fully or partly taxable, depending on whether your IRA includes any nondeductible contributions.  
• Fully taxable. If only deductible contributions were made to your traditional IRA (or IRAs, if you have more than one), you have no basis in your IRA. Because you have no basis in your IRA, any distributions are fully taxable when received. 
• Partly taxable. If you made nondeductible contributions or rolled over any after-tax amounts to any of your traditional IRAs, you have a cost basis (investment in the contract) equal to the amount of those contributions. These nondeductible contributions aren't taxed when they are distributed to you. They are a return of your investment in your IRA. Only the part of the distribution that represents nondeductible contributions and rolled over after-tax amounts (your cost basis) is tax free. If nondeductible contributions have been made or after-tax amounts have been rolled over to your IRA, distributions consist partly of nondeductible contributions (basis) and partly of deductible contributions, earnings, and gains (if there are any). Until all of your basis has been distributed, each distribution is partly nontaxable and partly taxable.
• From:  IRS Publication 590-B Distributions from Individual Retirement Arrangements

[dmertz]

No, it will not be totally nontaxable.  With a year-end balance in your traditional IRAs of $7,000 and a distribution during the year of $13,000, the nontaxable amount of the distribution will be ($13,000 / $20,000) * $13,000 = $8,450 and that taxable amount will be $4,550.  $4,550 of your basis in nondeductible traditional IRA contributions will remain in your traditional IRAs to be applied to future distributions.

[fred-lauria]

Thank you for the accurate response.  It verified the result of the SS worksheet I had completed.  Thanks again!