Common use of Tax Treatment of Distributions Clause in Contracts

Tax Treatment of Distributions. If all contributions to your IRA (xxher than rollover contributions) have been deductible for federal income tax purposes then all distributions from your IRA xxxl be taxable as ordinary income. However, if you have made any nondeductible IRA xxxtributions, distributions from your IRA xxxl be treated as partially a return of deductible contributions, if any, (taxable), partially a return of nondeductible contributions (nontaxable) and partially a distribution of earnings (taxable). The portion of an IRA xxxtribution which will be excludable from income will be determined by multiplying the total amount distributed by a fraction, the numerator of which is the aggregate of all your nondeductible IRA xxxtributions, and the denominator of which is the aggregate balance of all of your IRAs (including rollover IRAs and SEPs). For purposes of the foregoing, (a) all of your IRAs will be treated as a single IRA, (x) all distributions during a taxable year will be treated as a single distribution and (c) the aggregate balance of your IRAs will be determined as of the end of the calendar year with or within which your taxable year ends, after adding back any distributions for such year. Distributions from your IRA xxx not eligible for any special tax treatment such as five-or ten-year averaging or capital gains treatment.

Tax Treatment of Distributions. If all contributions to your tx xour IRA (xxher other than rollover contributions) have been deductible for federal fexxxal income tax purposes then all distributions from your IRA xxxl will be taxable as ordinary income. However, if you have made any axx nondeductible IRA xxxtributionscontributions, distributions from your IRA xxxl will be treated as partially pxxxially a return of deductible contributionscontributioxx, if any, (taxable), partially a return of nondeductible contributions (nontaxable) and partially a distribution of earnings (taxable). The portion of an IRA xxxtribution distribution which will be excludable from income will be determined deterxxxed by multiplying the total amount distributed by a fraction, the numerator of which is the aggregate of all your nondeductible IRA xxxtributionscontributions, and the denominator of which is the aggregate balance baxxxce of all of your IRAs (including rollover IRAs and SEPs). For purposes of the foregoing, (a) all of your IRAs will be treated as a single IRA, (xb) all distributions during a taxable year will be treated as a x single distribution and (c) the aggregate balance of your IRAs will be determined as of the end of the calendar year with or within which your taxable year ends, after adding back any distributions for such year. Distributions from your IRA xxx are not eligible for any special tax treatment such as five-or tenxxx-year averaging or capital gains treatment.