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<< If the balance in an IRA account falls below the amount of the contributions, is the amount by which it falls below the total amount of contributions considered a distribution and, if so, is it taxable? Suppose the contributions were made with pretax dollars which means of course that taxes haven't been paid on the contributions. In the event the accounts drops below the amount of the contributions, how is the difference treated tax-wise as that part of the contribution has "disappeared". >>

As has already been pointed out to you, there's no tax consequence until there are distributions, and a reduced value of the holdings within the IRA doesn't constitute a distribution.

If you're talking about all pre-tax (a/k/a deductible) contributions, there would be no deduction for the losses in the account. That money has already been removed from your taxable income, when you took the IRA deduction. You don't get to deduct it twice.

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Phil Marti
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