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Level 1
posted Feb 23, 2021 1:05:28 PM

I need to make a contribution to my IRA account with mine after-tax money (from Saving), how would you avoid pay tax again when you withdraw at retirement?

I've heard about form 8606 but not sure it will apply to my question.

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1 Best answer
Level 15
Feb 23, 2021 1:12:44 PM

You can put it in a ROTH IRA.  Or make a non deductible contribution to a Traditional IRA.  If you take a IRA Deduction for it on your tax return then it will be taxable when you take it out.  If you don't take a deduction you have a basis in your IRA.  You need to fill out the 8606 to keep track of your basis so when you take a distribution you don't pay tax on it again.

1 Replies
Level 15
Feb 23, 2021 1:12:44 PM

You can put it in a ROTH IRA.  Or make a non deductible contribution to a Traditional IRA.  If you take a IRA Deduction for it on your tax return then it will be taxable when you take it out.  If you don't take a deduction you have a basis in your IRA.  You need to fill out the 8606 to keep track of your basis so when you take a distribution you don't pay tax on it again.