UnThreaded | Threaded | Whole Thread (6) | Ignore Thread Prev | Next
Author: ngcpa Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76397  
Subject: Re: IRA Basis Date: 1/19/2004 10:12 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 1
An IRA basis is created by contributing to a traditional IRA in a year you
couldn't deduct it (because you and/or your spouse was covered by a plan
and had too much income). The amount that couldn't be deducted (there
has been a phase out range) becomes your IRA basis and is entered onto an
8606 form. Then when amounts are withdrawn from your IRA, you get to re-
cover your basis (the amount that was never taxed) tax free. Unfortunately
it comes back tax free in proportion to your total IRA. In your case, your
basis is 0, if all you did was roll over 401K money into an IRA. Since
the advent of Roth IRA's, this is not as common, since if you can't deduct
it anyway why not put it into a ROTH so the growth will also be recovered
tax free. However if you earn too much you can't contribute to a Roth.
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (6) | Ignore Thread Prev | Next


The Retire Early Home Page
Discussion on accelerating retirement day.
Foolanthropy 2014!
By working with young, first-time moms, Nurse-Family Partnership is able to truly change lives – for generations to come.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Macro Economics

Economic Implications of Cuba
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.