mbjg0788
Confused about dryer sheets
I am 60 years old. I am new to this web site. I am retired from the practice of law. I practiced for more than 25 years. I have a question about required minimum distributions. The way I understand rmds is that you take you life expectancy off the irs table and divide that into your retirement account balance as of 12/31 of the previous year and you pay tax on the result. So for example, let's say ten years ago you invested $100,000 into your retirement account. Let's say it time for a rmd. The value of the account as of 12/31 of last year is $180000. Let's say my life expectancy according to the irs table is 30 years. I would divide $180000 by 30 and get $6000. I would include the $6000 into my ordinary income on my tax return. My question is as follows: How come there is no reduction for the $100000 basis you had in the retirement account? Your true gain is $80000 ($180000 less $100000). Shouldn't $80000 be divided by 30 years to get the amount included in ordinary income? It appears as there is no reduction for your basis you had in the investment and are paying taxes not only on your true gain but also your basis, the amount you invested. Is this correct?
Thanks,
John
Thanks,
John