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Level 1
posted Jan 26, 2022 9:07:11 AM

Calculating Basis of Multiple IRAs

How do I calculate my IRA basis if I have multiple IRAs, have made some deductible and some non-deductible contributions in prior years, and have taken partial distribution(s) from one or more IRAs last year. Need this to be able to calculate the portion of my 2021 IRA distributions that are taxable.  Do I use aggregate of all IRAs or handle each IRA individually?

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1 Best answer
Expert Alumni
Jan 26, 2022 9:21:59 AM

Yes, you aggregate them.  Here are the steps to follow:

 

  1. Collect your IRS Forms 8606 you have filed through the years for all the traditional IRA accounts. Every time you make a non-deductible contribution, you must file Form 8606. 
  2. Add the non-deductible contributions made to all of the accounts using data from Line 1 of your Forms 8606. The resulting figure represents your cost basis across the IRAs.
  3. Collect your Forms 1099-R for all accounts. 
  4. Review the figures in Boxes 1 and 2a on all the 1099-R forms to see if the two figures differ. For any forms on which the figures differ, deduct the taxable amount from the gross distribution amount.  Add together the results of this calculation from all the forms. This figure represents your total non-taxable withdrawals. For example, if you took a distribution of $1,000 one year and only $800 of it was taxable, the equation is $1,000 minus $800, or $200.
  5. Lastly, deduct your non-taxable withdrawal figure from your total cost basis figure to arrive at your total cost basis over the multiple IRAs.

 

1 Replies
Expert Alumni
Jan 26, 2022 9:21:59 AM

Yes, you aggregate them.  Here are the steps to follow:

 

  1. Collect your IRS Forms 8606 you have filed through the years for all the traditional IRA accounts. Every time you make a non-deductible contribution, you must file Form 8606. 
  2. Add the non-deductible contributions made to all of the accounts using data from Line 1 of your Forms 8606. The resulting figure represents your cost basis across the IRAs.
  3. Collect your Forms 1099-R for all accounts. 
  4. Review the figures in Boxes 1 and 2a on all the 1099-R forms to see if the two figures differ. For any forms on which the figures differ, deduct the taxable amount from the gross distribution amount.  Add together the results of this calculation from all the forms. This figure represents your total non-taxable withdrawals. For example, if you took a distribution of $1,000 one year and only $800 of it was taxable, the equation is $1,000 minus $800, or $200.
  5. Lastly, deduct your non-taxable withdrawal figure from your total cost basis figure to arrive at your total cost basis over the multiple IRAs.