how much money can you deduct for an ira contribution
Example: Mr Gibbs has a non-deductible traditional IRA that has a value of $30,000 and a $12,000 basis of after tax contributions. He also has a traditional IRA valued at $210,000 consisting of a rollover from a QRP plus some deductible IRA contributions. If he withdraws the $30,000 from his non-deductible IRA he must prorate the basis across his aggregate IRA balances. The basis computation: $12,000/$240,000 x $30,000 = $1,500. Thus $28,500 of the withdrawal would be taxable and the basis in the non-deductible IRA would now be $10,500.