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Non-Tax Deferred IRA

As one of my retirement accounts, I have a non-tax deferred IRA.  If I understand correctly, I am required to pay taxes on the growth of this account in the form of RMD.  Is the pre-taxed portion of this account included in the RMD or am I allowed to let it continue to grow? Thank you.

5 Replies
Katherine S 63
Employee Tax Expert

Non-Tax Deferred IRA


I am wondering if you are not using the correct term.  Do you mean non deductible IRA?


This link talks about non deductible IRAs.  You can click on it or copy and paste it to a browser.

I am always concerned about non deductible IRAs because they can become quite complicated.  The taxpayer has to keep excellent records so that they do not pay taxes on the principal portion because they never got a tax break on the investment when it was first put in.  The principal would come out tax free but the earnings would be taxable.

Sure hope that helps.

Please reply if you have further questions.

Katie S.

Katherine S 63

Non-Tax Deferred IRA

There are 2 kinds of IRA....Traditional IRA and ROTH IRA.  


Traditional IRA - Contributions may be deductible on your current return or not deductible.  They grow tax deferred.  When you take a distribution or RMD the whole distribution will be added to your other income and taxed as regular income.  You don't get capital gains treatment on it.  Unless you made any non deductible contributions.


ROTH IRA - Contributions are not deductible when you make them.  But they grow tax free.  So when you take a distribution you do not pay tax on it (not even on the growth).  Unless you take it early and owe the Early withdrawal penalty.


Here are 2 IRS instructions

IRS pub 590A for IRA Contributions

IRA pub 590B for IRA Distributions

Non-Tax Deferred IRA

In response to your reply; yes, this is a non-deductable IRA (I am married filing separate).  My question is; is the pre-taxed portion of this account included in the RMD or am I allowed to let it continue to grow?


In response to your concerns regarding recordkeeping.  Turbo Tax has done a great job of walking me through this; Form 8606, etc.  Thank you. 

Tim Hickerson
Employee Tax Expert

Non-Tax Deferred IRA

Thank you for your question concerning Required Minimum Distributions.


According to the Internal Revenue Service (link: https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs), "You cannot keep retirement funds in your account indefinitely. You generally have to start taking withdrawals from your IRA, SIMPLE IRA, SEP IRA, or retirement plan account when you reach age 72 (73 if you reach age 72 after Dec. 31, 2022)."


The only account not subject to required minimum distributions are Roth IRAs. However, Roth IRAs that are part of a 401(k) or 403(b) retirement plan are subject to the RMD rules for 2022 and 2023. "However, for 2024 and later years, RMDs are no longer required from designated Roth accounts. 2023 RMDs due by April 1, 2024, are still required."


"Your required minimum distribution is the minimum amount you must withdraw from your account each year.

  • You can withdraw more than the minimum required amount.
  • Your withdrawals will be included in your taxable income except for any part that was taxed before (your basis) or that can be received tax-free (such as qualified distributions from designated Roth accounts)."

Since your non-deductible contributions are included in a "traditional" IRA, those contributions will be subject to the minimum distribution rules. However, since you have already paid taxes on these contributions, you will not incur additional taxes when the non-deductible contributions are distributed. This prevents paying taxes twice on such contributions.



Level 15

Non-Tax Deferred IRA

RMDs are calculated without regard to whether or not the account contains after-tax contributions.  The calculation uses the enter year-end balance in the account.

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