Common use of Taxation of Traditional IRA Distributions Clause in Contracts

Taxation of Traditional IRA Distributions. The taxation of Traditional IRA distributions depends on whether or not you have ever made nondeductible Traditional IRA contributions. If you have only made deductible contributions, all Traditional IRA distribution amounts will be included in income. If you have ever made nondeductible contributions to any Traditional IRA, the following formula must be used to determine the amount of any Traditional IRA distribution excluded from income: (Aggregate Nondeductible Contributions) x (Amount Withdrawn) penalty tax of six percent will be imposed upon the excess amount. The procedure for correcting an excess is determined by the Aggregate IRA Balance = Amount Excluded From Income timeliness of the correction as identified below.

Appears in 7 contracts

Samples: Individual Retirement Custodial Account Agreement, Ira Prototype Plan Agreement, Ira Prototype Plan Agreement

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