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. I didn't record my Traditional IRA contributions. Is there a website that lists ...

    Visit the Congressional Budget Office's Online Tax Guide, which summarizes IRA contribution limits and phase-out ranges for ... Read Answer >>
  2. My recently deceased spouse's IRA has been rolled over into mine. Does the cost basis ...

    The basis attributed to IRA assets that you inherited remains the same. Since you are a spouse beneficiary and you elect ... Read Answer >>
Related Articles
  1. Retirement

    Retirement Plan Tax Form 8606: When To File

    If you have a Roth IRA, you are responsible for keeping track of your pretax versus after-tax assets.
  2. Retirement

    How IRA Contributions Affect Your Taxes

    Learn how to work with the tax man to avoid getting gouged when you convert your plans.
  3. Retirement

    After-Tax Balance Rules For Retirement Accounts

    Accumulating post-tax assets can work to your advantage. Find out how.
  4. Retirement

    How After-Tax Rollovers Affect Your IRA

    Consolidating retirement assets? Make sure you account for pre-tax and after-tax assets separately.
  5. Financial Advisor

    IRS Rule on 401(k) After-Tax Dollars

    A relatively new IRS ruling has made it easier for taxpayers to benefit from making after-tax contributions to their 401(k) and/or other retirement plans.
  6. Retirement

    Deducting Losses On Your IRA Investments

    In regular accounts in which taxes are not deferred, losses on investments can be included on your tax return. Find out how.
  7. 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.
  8. Retirement

    Tips On How To Use IRAs To Boost Retirement Savings

    According to the Trustees of the Social Security Fund, the fund will be depleted by 2037. Are you ready?
  9. Retirement

    How To Convert A Non-Deductible IRA Into A Roth IRA

    Here's a step-by-step guide for transferring one retirement plan into another.
RELATED TERMS
  1. After-Tax Return On Assets

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

    A tax form distributed by the Internal Revenue Service (IRS) ...
  3. IRA Plan

    A plan that individuals may establish to arrange and plan for ...
  4. After-Tax Real Rate Of Return

    The actual financial benefit of an investment after accounting ...
  5. Recharacterization

    The treatment of a contribution as being made to another type ...
  6. Spousal IRA

    A type of individual retirement account that allows a working ...
Hot Definitions
  1. Investment

    An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic ...
  2. Redlining

    The unethical practice whereby financial institutions make it extremely difficult or impossible for residents of poor inner-city ...
  3. Nonfarm Payroll

    A statistic researched, recorded and reported by the U.S. Bureau of Labor Statistics intended to represent the total number ...
  4. Conflict Theory

    A theory propounded by Karl Marx that claims society is in a state of perpetual conflict due to competition for limited resources. ...
  5. Inflation-Linked Savings Bonds (I Bonds)

    U.S. government-issued debt securities similar to regular savings bonds, except they offer an investor inflationary protection, ...
  6. Peak Globalization

    Peak globalization is a theoretical point at which the trend towards more integrated world economies reverses or halts.
Trading Center