teedup1 wrote:- Any amount withdrawn from a Traditional IRA, including the principal, is fully taxable as ordinary income in the year the distribution is made/taken.I reply:This is incorrect. Any contributions which were made with after tax dollars (non-deductible in the year of contribution) are not taxed when they are withdrawn from the IRA. That's why non-deductible contributions are reported on Form 8606. The procedure is to take the total amount of your non-deductible contributions divided by the total value of your IRA on 12/31 of the year before the distribution and multiply by the value of the distribution. The "answer" you get is the amount of the distribution that is tax-free.Ira
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