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Level 2

What is the difference between a deductable and non deductable traditional IRA contribution

I have a mandatory IRA 2016 distribution. This IRA was transferred from an employer 401 plan. some of the funds were after tax contributions.Are these deductible or nondeductible for tax purposes.

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Level 20

What is the difference between a deductable and non deductable traditional IRA contribution

The rollover from a 401(k) that contained after-tax basis to a traditional IRA results in the 401(k)'s after-tax basis becoming basis in nondeductible contributions in your traditional IRAs.

When dealing with this in TurboTax, after entering the Form 1099-R reporting the distribution from the traditional IRA and clicking the Continue button on the Your 1099-R Entries page, TurboTax will ask if you made nondeductible contributions to your traditional IRAs.  Answer Yes, then click the EasyGuide button on the page that follows.  Proceed to where you can select that box indicating that you transferred an employer plan to a traditional IRA, then enter the amount of after-tax basis included in that transfer.  TurboTax will then ask you to prepare an explanation statement regarding this adjustment to your traditional IRA basis in nondeductible contributions.  TurboTax will include this amount on line 2 of Form 8606 when preparing the form to determine the taxable amount of your traditional IRA distribution.