How are distributions taxed if nondeductible contributions were made to an IRA?
Because nondeductible IRA contributions are made using income which has already been taxed, the portion of the IRA distributions consisting of nondeductible contributions will not be taxed again when received by you. If the IRA contains both deductible and non-deductible contributions, each IRA distribution will consist of a nontaxable portion (return of nondeductible contributions) and taxable portions (return of deductible contributions, if any, and account earnings). Form8606 can be used to calculate the nontaxable portion of any distribution you receive.
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