On Apr 6, 2021, at 10:55 AM, Michael or Penny Novack
<stepbystepf...@comcast.net> wrote:
On 4/5/2021 8:57 PM, David Carlson wrote:
David P,
What verb would you use to declare that transactions in or out of a
particular account should appear in a tax report as part of the total that
should appear, for example, on a certain line on form 1099-R from a certain
custodian. The tax schedule report assigns, associates, links or somehow
picks out which transactions create the list of transactions that should be
included on whichever line of whichever form to be reported to the U.S.
IRS. The user should have created a certain income account to identify
cash moves from a tax deferred asset account to a current asset account,
which should appear on a certain 1099-R form, linked to that form in the
tax report, and those transactions appear on that line in the tax report.
I am going to repeat. Not that simple. Distributions from a "regular" IRA would
be simple (since all contributions were pre-tax). That is not true for a 401K which might
have had most contributions pre-tax but MIGHT have also had post-tax contributions. All
contributions to a Roth IRA are post-tax.
That means all distributions from a regular IRA are taxable income.
Most distributions from a 401k are taxable income (but a portion of a
distribution might not be). AFAIK, most administrators of a 401k will get the
non-taxable money out first so only needing to cope with one mixed distribution
and from then on entire distribution taxable. The statements you get for a 401k
usually show what part (if any) of the contribution balance is post-tax.
Most distributions from a Roth IRA are mixed, part taxable, part not. I do not
know what administrators of a Roth do. I don't know what statements from a
Roth look like.
Michael D Novack
ROTH IRA’s use after tax contributions only, therefore any distribution from a
ROTH IRA is non-taxable. There is nothing that is mixed. You can convert
standard IRA’s into a ROTH IRA but you will have to pay taxes on any funds
converted to the ROTH IRA. If you’re good at investing you can make a boatload
of non-taxable money using a ROTH IRA.
Ken Schneider
It is generally true that a distribution from a Roth is not taxed unless
the distribution happens before the recipient is 59 and 1/2 years old or
if the account has been in existence for less than 5 years. In that
case, any earnings in the account are taxed plus I believe a penalty.
In addition, a distribution from a "regular" (Traditional) IRA that
contains both before and after tax money is prorated based on the
percentage of each in the account.
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