8.8 Taxable Distributions From Traditional IRAs

If all of your tradional IRA contributions were deductible, any distribution from any of your traditional IRAs will be taxable unless you roll it over or redeposit it within 60 days (8.10). If you made both deductible and nondeductible contributions, withdrawals allocable to the deductible contributions are taxable and the balance is tax free (8.9).

Taxable distributions are also subject to these age-related restrictions:

  • Distributions before age 59½ are subject to a 10% tax penalty, unless you are totally disabled, meet exceptions for paying medical costs, receive annual payments under an annuity-type schedule or you qualify for another exception (8.12).
  • After you reach age 70½, you must start to receive annual distributions from your traditional IRA under a life-expectancy calculation. The required starting date is the April 1 of the year after the year in which you reach age 70½. For example, if you reach age 70½ during 2012, you must start taking IRA distributions no later than April 1, 2013. Failure to take the annual required minimum distribution could result in penalties (8.13).

How to report IRA distributions on your 2012 return.

All IRA distributions are reported to you and to the IRS on Form 1099-R (7.1). Form 1099-R must be attached to your return only if federal tax has been withheld. You can avoid withholding by instructing the payer not to withhold using Form W-4P or a substitute form (26.11).

If you have never made ...

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