A:

Distributions of after-tax amounts (amounts already taxed) will not be taxable when distributed to you.

However, you will be required to report the amount on your tax return as a non-taxable distribution. The plan should send you a Form 1099-R, which is used to report distributions from retirement accounts. The 1099-R should show the amount as non-taxable. Be sure to provide your tax preparer with a copy of the 1099-R, but first make sure it does not reflect the amount as taxable.

For more information, see Instructions For Forms 1099-R And 5498 on the IRS website.

This question was answered by Denise Appleby
(Contact Denise)

RELATED FAQS
  1. Which amount should the brokerage use for the 1099-R?

    Assets in IRAs do not carry a cost basis for tax purposes. Read Answer >>
Related Articles
  1. Retirement

    After-Tax Balance Rules For Retirement Accounts

    Accumulating post-tax assets can work to your advantage. Find out how.
  2. Taxes

    Unexpected 1099-R Form: What To Do

    Did your IRA custodian report distributions you thought were non-reportable? Find out what went wrong.
  3. Retirement

    Retirement Plan Tax Form 5329: When To File

    Read this if you've taken early distributions or owe excess-contribution or excess-accumulation penalties.
  4. Financial Advisor

    Tough Times: Should You Dip Into Your Qualified Plan?

    401(k)s, pensions and profit-sharing plans can be a source of cash, but there are consequences to this option.
  5. Retirement

    Managing Annuity Distributions in Retirement

    Strategies to help manage taxable deferred annuity distribution in retirement.
  6. Retirement

    How IRA Contributions Affect Your Taxes

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

    Tips For Moving Retirement Plan Assets

    Moving assets is common when changing jobs or retiring, but you have to do this carefully to avoid penalties.
  8. Retirement

    Not All Retirement Accounts Should Be Tax-Deferred

    It may be better to leave your assets exposed to the tax man when you're saving to retire.
  9. Retirement

    Tax Treatment Of Ineligible IRA Rollovers

    Eager to save for retirement? Learn how to avoid overpayment penalties.
  10. Financial Advisor

    How to Navigate Taxable Mutual Fund Distributions

    It's almost time for year-end capital gains distributions for mutual funds. Here's how to monitor them and minimize their tax impact.
RELATED TERMS
  1. Form 1099-R

    An Internal Revenue Service (IRS) form with which an individual ...
  2. Cash Liquidation Distribution

    The amount of capital that is returned to the investor or business ...
  3. Nontaxable Distribution

    A type of dividend that is paid to shareholders of a corporation ...
  4. Taxable Income

    Taxable income is described as gross income or adjusted gross ...
  5. After-Tax Income

    The amount of money that an individual or company has left over ...
  6. Distribution

    1. When trading volume is higher than that of the previous day ...
Hot Definitions
  1. Trickle-Down Theory

    An economic idea which states that decreasing marginal and capital gains tax rates - especially for corporations, investors ...
  2. North American Free Trade Agreement - NAFTA

    A regulation implemented on Jan. 1, 1994, that eventually eliminated tariffs to encourage economic activity between the United ...
  3. Agency Theory

    A supposition that explains the relationship between principals and agents in business. Agency theory is concerned with resolving ...
  4. Treasury Bill - T-Bill

    A short-term debt obligation backed by the U.S. government with a maturity of less than one year. T-bills are sold in denominations ...
  5. Index

    A statistical measure of change in an economy or a securities market. In the case of financial markets, an index is a hypothetical ...
  6. Return on Market Value of Equity - ROME

    Return on market value of equity (ROME) is a comparative measure typically used by analysts to identify companies that generate ...
Trading Center