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Question for the Money Doctors

Question submitted on Apr 29, 2014.

Question

What portions of a RMD (required minimum distribution) are not taxable? That is they are part of basis that the IRS uses to determine tax? Two possibles: Non deductible contributions to IRAs and after tax contributions to a 401 k . Are these examples correct? Are there other sources of basis?

Answer

The two examples that you gave of creating basis in a retirement account are the most common ways to create basis. Just a reminder, that as you take the RMD distribution, there is a calculation to prorate the basis included in the distribution each year.


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