Taxable RMD Distribution

[w119]

I took an RMD distribution which included $388 of Post-86 After Tax. The financial institution included the $388 in the Form 1099-R that I received. Please explain why this after-tax distribution was included as taxable income. Were these funds income that accumulated over the years that had not been previously taxed? 

If the $388 should not be taxed at this time, how do I report it on the Turbotax federal form? 

[MelodyB]

Hi there!

Let me give you a little more background on this;

Post 1986 After Tax Contribution Account means the separate Account maintained for a Participant to record: (i) his share of the Trust Fund attributable to his Post 1986 After Tax Contributions; (ii) his share of post 1986 after tax contributions that he made under the Raff-Hughes Plan, which he elected to transfer to this Plan, if any; and (iii) earnings and losses attributable thereto. The Pension Committee shall separately account, through subaccounts for "Post 1986 Voluntary Contributions", and earnings and losses attributable thereto. "Post 1986 Voluntary Contributions" shall mean after-tax contributions made to the Plan which do not qualify for an Employer Matched Contribution.

So these amounts will not receive any matching from the Employer.

[GCEA]

Hi @w119 ,

If the financial institution reported your Post 1986 after tax contribution in Box 1 and Box 2, it might be that they did not track the after tax contributions (this contributions are usually reported in Box 5 ) separately and you might need to adjust the basis to determine the correct taxable distribution amounts. 

Until all non-taxable money is returned to you, a portion of your benefit is paid to you tax-free each year. After all of your after-tax contributions are returned to you, your gross distribution and your taxable amounts will
be the same.

Please reach out to your financial institution. They will be able to let you if the reason they reported as taxable and if necessary help you figure out the correct basis. 

Below are a few resources that might help you better understand this distributions : https://www.irs.gov/pub/irs-pdf/p575.pdf  Page 17 .

Thank you and good luck!