Taxation of after-tax RMDs

[Guest Penny17]

I am starting to have required minimum distributions made out of my 401(k) plan. I previously made after-tax contributions. For purposes of computing the portion of the distribution which is a return of the basis, are the RMDs treated as periodic or as nonperiodic payments? No annuity contract is involved, just basic distributions from the account.

[Bird]

I think if they are pre-87 after-tax contributions they can come out first, otherwise basis is recovered ratably. Hoping someone else can confirm.

[K2retire]

Are they after tax contributions or Roth contributions?

[Guest Penny17]

After-tax contributions from the dinosaur years.

[mbozek]

I am starting to have required minimum distributions made out of my 401(k) plan. I previously made after-tax contributions. For purposes of computing the portion of the distribution which is a return of the basis, are the RMDs treated as periodic or as nonperiodic payments? No annuity contract is involved, just basic distributions from the account.

See IRS Pub 575, P 9 -16 for taxation of periodic payments with after tax amounts.

[GMK]

As Bird points out, distributions of contributions you made before 1987 are treated differently than distributions of amounts contributed from 1987 on.

If you are taking a distribution of after-tax amounts you contributed before 1987, you can take the basis and leave the earnings, which means the distribution is not taxed.

[masteff]

Of course this is really a question for your benefits department / 401(k) provider as they will be the ones processing the distribution and (should be) calculating the taxable portion of it. We can tell you how it will likely work in general but we can't guarantee how it will actually be processed.