A:

No. Withdrawals of your after-tax contributions to your IRAs should not be taxed. However, the only way to make sure this does not happen is to file IRS Form 8606. Form 8606 must be filed for every year you make after-tax (non-deductible) contributions to your Traditional IRA and for every subsequent year until you have used up all of your after-tax balance.

(To read more about IRA contributions, read Retirement Plan Tax Forms You May Need to File – Part 1 and Part 2, and An Overview of After-Tax Balance Rules.)

This question was answered by Denise Appleby
(Contact Denise)

RELATED FAQS
  1. Am I eligible to contribute $6,500 to a Roth IRA or a regular IRA?

    I have been saving the max $24K in a Roth 401k. I have a salary of $225K and own a small business with about 11 employees, ... Read Answer >>
  2. Do I have to pay taxes on money that I took out of an IRA account?

  3. Do I have to stop contributing to my second Roth IRA?

    I have a regular IRA and Roth IRA with a brokerage firm as well as a 401k Read Answer >>
  4. Am I allowed to adjust my AGI for IRA contributions made in 2015?

    I have made above the $100K and am a single tax payer, my employer does offer a 401k plan. I am a little unclear on ... Read Answer >>
  5. If myself and my employer contribute $59,000 to my 401K in 2016 (I'm 52.), can I ...

  6. As a 24 year old, what are my options to start saving/investing for retirement?

    I am employed, but do not have 401k or savings plan.  ... Read Answer >>
Related Articles
  1. Financial Advisor

    7 Top IRA Strategies for Your Clients

    With IRA season in full swing, advisors should consider these seven strategies for clients.
  2. Retirement

    How To Use Your IRA As A Last-Minute Tax Deduction

    While some people are stressing over their taxes, there is a big advantage to delaying the process: You can maximize your 2014 contributions to your IRA.
  3. Retirement

    Top 10 Mistakes To Avoid On Your IRA

    IRA rules are complicated. It's easy to make mistakes – and they can cost you big time.
  4. Financial Advisor

    IRAs: Top Things You Need to Know About Them

    By understanding the major rules for both traditional and Roth IRAs, you'll be prepared to enjoy the benefits of these investment opportunities.
  5. Retirement

    These IRA Contributions Will Cut Your 2015 Taxes

    No matter how you save for retirement, take advantage of the time between now and April 15, 2016, to add to your nest egg while cutting your tax bill.
  6. Retirement

    Roth IRA Contribution Rules: The Basics

    What you need to know about Roth IRA contributions – from eligibility to dollar limits, deadlines to tax breaks.
  7. Retirement

    How (And Why) To Open an IRA Now

    Take these simple steps to set up an Individual Retirement Account that will save you tax money and set you up for the future.
  8. Retirement

    5 Secrets You Didn't Know About Traditional IRAs

    A traditional IRA gives you a current-year tax benefit and future years of tax savings – minus the income restrictions that limit who can have a Roth IRA.
  9. Retirement

    How Are Dividends On IRAs Taxed?

    Reinvesting dividends in an IRA is a great way to grow your retirement funds faster, but be sure you understand the potential tax trap.
  10. Retirement

    Funding Your IRA vs. Your Roth IRA, Which First?

    The answer depends on where you are in your career and personal life each year. Here are some scenarios and rules to think about.
RELATED TERMS
  1. After-Tax Contribution

    A contribution made to any designated retirement or any other ...
  2. After-Tax Return

    The return on an investment including all income received and ...
  3. After-Tax Return On Sales

    A profitability measure that indicates how well a company uses ...
  4. After-Tax Return On Assets

    A profitability measure that indicates how well a company uses ...
  5. Form 8606

    A tax form distributed by the Internal Revenue Service (IRS) ...
  6. After-Tax Income

    The amount of money that an individual or company has left over ...
Hot Definitions
  1. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  2. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  3. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
  4. Russell 3000 Index

    A market capitalization weighted equity index maintained by the Russell Investment Group that seeks to be a benchmark of ...
  5. Enterprise Value (EV)

    A measure of a company's value, often used as an alternative to straightforward market capitalization. Enterprise value is ...
  6. Security

    A financial instrument that represents an ownership position in a publicly-traded corporation (stock), a creditor relationship ...
Trading Center