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ent1ent1
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When my RMD is greater than my remaining basis in my traditional IRA, why isn’t my basis “zeroed out” instead of showing only a small reduction from some calculation?

 
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When my RMD is greater than my remaining basis in my traditional IRA, why isn’t my basis “zeroed out” instead of showing only a small reduction from some calculation?

You don't receive your basis back immediately.

For example, if your withdrawal was 4% of the total value of all your traditional IRAs (as of end of previous year), then you got back 4% of your basis.  The basis returned (not taxable) is spread out over the entire amount of the IRA.   Only way to get back 100% of basis is to withdraw 100% of your traditional IRAs.  For this computation, all your traditional IRA accounts is considered one personal IRA.

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2 Replies

When my RMD is greater than my remaining basis in my traditional IRA, why isn’t my basis “zeroed out” instead of showing only a small reduction from some calculation?

You don't receive your basis back immediately.

For example, if your withdrawal was 4% of the total value of all your traditional IRAs (as of end of previous year), then you got back 4% of your basis.  The basis returned (not taxable) is spread out over the entire amount of the IRA.   Only way to get back 100% of basis is to withdraw 100% of your traditional IRAs.  For this computation, all your traditional IRA accounts is considered one personal IRA.

When my RMD is greater than my remaining basis in my traditional IRA, why isn’t my basis “zeroed out” instead of showing only a small reduction from some calculation?

Not quite. If your BASIS is 4% of the value of your IRAs (after adding back that distribution) then 4% of your distribution is not taxed (and becomes the basis reduction).
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