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Subject Author Date
Unknown IRA basis Jim Prescott 06-11-2008
Posted by Jim Prescott on June 11, 2008, 8:25 pm
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 I'm helping someone who just started taking RMDs from a traditional
IRA. They have no idea of their basis. Contributions would have been
made in the 1970s & 80s and their tax records from that period are at
best fragmentary (although in at least two years it included letters
from the IRS questioning the deductibility of their IRA contributions
but no indication as to how the matter was resolved).

The IRA custodian doesn't have online records going back that far and
they probably wouldn't know basis anyway.

Can the IRS tell us when the last 8606 was filed and what was on it
(after any IRS changes)?

Is assuming $0 basis their only option at this point?

--
Jim Prescott - Computing and Networking Group        jgp@seas.rochester.edu
School of Engineering and Applied Sciences, University of Rochester, NY

--
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Posted by Bill on June 12, 2008, 11:58 am
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jgp@seas.rochester.edu (Jim Prescott) posted:

>I'm helping someone who just started taking
>RMDs from a traditional IRA. They have no
>idea of their basis. Contributions would have
>been made in the 1970s & 80s and their tax
>records from that period are at best
>fragmentary (although in at least two years it
>included letters from the IRS questioning the
>deductibility of their IRA contributions but no
>indication as to how the matter was resolved).

>The IRA custodian doesn't have online
>records going back that far and they probably
>wouldn't know basis anyway.

>Can the IRS tell us when the last 8606 was
>filed and what was on it (after any IRS
>changes)?

>Is assuming $0 basis their only option at this
>point?

There is _no basis issue_ in a traditional IRA.
The RMD is based on the IRA balance as of the end of the previous year.

Now, if the TP was making "after tax" contributions to an IRA, and
wishes to withdraw those -- net without interest, of course -- then the
TP can request IRS for copies of returns for the years in question --
and could include in the request a specific query regarding Form 8606.
That particular amount can be withdrawn with no tax liability -- but
separate from the RMD.

The RMD can be computed by using Dec 31st 2007 balance as reported by
the Trustee on Form 5498 -- which should have been out by now. Anyway,
the TP should be able to get a confirmation, if the 5498 was misplaced,
and that balance figure is the only necessity for calculating RMD. See
Pub 590 and check the appropriate Appendix for your friend, to determine
the exact RMD.

Bill

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Rich Carreiro on June 12, 2008, 1:54 pm
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an_ordinary_guy_158@hotmail.com (Bill) writes:

> Now, if the TP was making "after tax" contributions to an IRA, and
> wishes to withdraw those -- net without interest, of course

You can't withdraw non-deductible IRA contributions
like that. They come out pro-rata, with the denominator
being the total value of ALL the TP's traditional IRAs.
See Form 8606.

> That particular amount can be withdrawn with no tax liability

No, it can't.

--
Rich Carreiro rlc-news@rlcarr.com

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by D. Stussy on June 12, 2008, 4:08 pm
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> an_ordinary_guy_158@hotmail.com (Bill) writes:
> > Now, if the TP was making "after tax" contributions to an IRA, and
> > wishes to withdraw those -- net without interest, of course
>
> You can't withdraw non-deductible IRA contributions
> like that. They come out pro-rata, with the denominator
> being the total value of ALL the TP's traditional IRAs.
> See Form 8606.
>
> > That particular amount can be withdrawn with no tax liability
>
> No, it can't.

Actually, it is without liability. However, it must be prorated as a ratio
applied to all distributions. It's not possible to withdraw ONLY the
post-tax contributions from a traditional IRA. Perhaps "Bill" was thinking
of the Roth IRA?

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Bill on June 13, 2008, 12:37 pm
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spam@bde-arc.ampr.org (D. Stussy) posted:

>in message
>>er.com...

>>>an_ordinary_guy_158@hotmail.com (Bill)
>>>writes:

>>>Now, if the TP was making "after tax"
>>>contributions to an IRA, and wishes to
>>>withdraw those -- net without interest, of
>>>course

>>You can't withdraw non-deductible IRA
>>contributions like that. They come out
>>pro-rata, with the denominator being the total
>>value of ALL the TP's traditional IRAs. See
>>Form 8606.

>>>That particular amount can be withdrawn
>>>with no tax liability

>>No, it can't.

>Actually, it is without liability. However, it
>must be prorated as a ratio applied to all
>distributions. It's not possible to withdraw
>ONLY the post-tax contributions from a
>traditional IRA. Perhaps "Bill" was thinking of
>the Roth IRA?

D. Stussy nailed it. I was addled in my thinking -- torn between the
"RMD" issue and the FIFO application to early Roth distributions. Mea
Culpa. Appreciation the clarifications, all.

Bill

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

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