Estate Planning Red Flag – You’ve made nondeductible contributions to your IRA

Description

Abstract: Traditional IRAs can hold a mixture of deductible (after-tax) and nondeductible (pretax) contributions. If this is the case, it’s critical to track contributions carefully to avoid double taxation of distributions. Why? Because the IRS treats distributions as a blend of pretax and after-tax dollars. This brief article explains why a person can end up overpaying taxes if the distributions are treated as fully taxable.