Taxes on IRA Withdrawal
Terry, on January 29,2019 you responded to a question titled “401K Withdrawals.” Part of your response was “But if you are taking money out of a 40l(k), you must pay taxes in the year in which the money is received.” Regarding my IRA, I’ve made thousands of dollars of contributions to it that were from already taxed income I earned at my job. I documented the contributions on IRS Form 8606 that was sent to the IRS with my annual tax return. If I withdraw these contributions and move to a non-IRA investment account, I shouldn’t have to pay any taxes as I already did. Would you confirm. Thanks.
Terry Says
My comments were for a 40l(k) plan. ALL of that money is a pre-tax investment. One exception: only recently some companies have started including ROTH 40l(k)s in their plan, which is an after-tax contribution.
An IRA can contain either pre-tax contributions, or after-tax contributions to a traditional IRA (perhaps because you did not qualify for a pre-tax contribution at the time) or it can be a ROTH IRA. The tax treatment is different in each case. I only hope you did not mix both pre and after tax contributions in the same IRA. That would create a nightmare tax situation! Check with your accountant.
