Required Mandatory Distribution, After Tax

[naz1]

I need to correct an earlier post. I meant to ask for guidance in the reporting of a required mandatory distribution when the investment into the 401k was made with AFTER TAX FUNDS. 

[K M W]

There is a difference between withdrawals from after-tax 401(k) plans versus Roth 401(k) plans.

Contributions to both an After-tax 401(k) plan and contributions to a Roth 401(k) plans are made on an after-tax basis. However, there is a big difference when it comes to distributions.  When you make qualified withdrawal from an after-tax 401(k) plan, the portion of the distribution that represents your contributions to the plan will be tax free, but the investment gains will be taxed as ordinary income.  Conversely, a qualifying withdrawal from a Roth 401(k) is completely tax free.

So if your RMD is from an after-tax 401(k) plan, there will be a taxable amount to the distribution. The amount of the taxable withdrawal will depend on the ratio or your contributions to the plan versus the earnings in your after-tax 401(k) account balance.  Your 401(k) administrator should be able to give you information as to what portion of your distribution is considered the taxable portion.

[SwapnaM]

 In a 401(k), pre-tax and after-tax contributions are subject to RMDs at age 73. You can avoid the RMDs by rolling the after-tax amounts to a Roth IRA.

@naz1 Thanks for your question!

[dmertz]

The amount of your after-tax basis in the traditional account in 401(k) plan has no bearing on the calculation of the amount of your RMD.  It only is used in determining the taxable amount of any distributions from the traditional account in the 401(k).