cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
New Member

I started a nondeductible IRA in 1999. I just cashed it out in 2018. Can I deduct the cost basis of the distribution since all the contributions were made after taxes.

 
1 Best answer

Accepted Solutions
Highlighted
Level 15

I started a nondeductible IRA in 1999. I just cashed it out in 2018. Can I deduct the cost basis of the distribution since all the contributions were made after taxes.

All of your traditional IRAs are treated as a single account for the purpose of determining the taxable amount of distributions, so particular accounts are not deductible or nondeductible.  It's your contributions that are either deductible or nondeductible and apply to your traditional IRAs in aggregate.

When you made the nondeductible contribution in 1999, you were required to file 1999 Form 8606 to report the nondeductible contribution.  After entering the 2018 Form 1099-R into 2018 TurboTax, click the Continue button on the Your 1099-R Entries page and answer the additional questions, particularly entering your 2018 year-end balance in traditional IRAs (that would be zero if the traditional IRA you cashed out was your only traditional IRA), that you made nondeductible contributions, then enter the amount from line 12 of your 1999 Form 8606as your basis in nondeductible traditional IRA contributions for years prior to 2018.  TurboTax will prepare Form 8606 Part 1 to calculate the taxable and nontaxable amounts of the 2018 distribution.

View solution in original post

1 Reply
Highlighted
Level 15

I started a nondeductible IRA in 1999. I just cashed it out in 2018. Can I deduct the cost basis of the distribution since all the contributions were made after taxes.

All of your traditional IRAs are treated as a single account for the purpose of determining the taxable amount of distributions, so particular accounts are not deductible or nondeductible.  It's your contributions that are either deductible or nondeductible and apply to your traditional IRAs in aggregate.

When you made the nondeductible contribution in 1999, you were required to file 1999 Form 8606 to report the nondeductible contribution.  After entering the 2018 Form 1099-R into 2018 TurboTax, click the Continue button on the Your 1099-R Entries page and answer the additional questions, particularly entering your 2018 year-end balance in traditional IRAs (that would be zero if the traditional IRA you cashed out was your only traditional IRA), that you made nondeductible contributions, then enter the amount from line 12 of your 1999 Form 8606as your basis in nondeductible traditional IRA contributions for years prior to 2018.  TurboTax will prepare Form 8606 Part 1 to calculate the taxable and nontaxable amounts of the 2018 distribution.

View solution in original post