After age 70 1/2, you must withdraw a certain portion of your traditional IRA each year. Uncle Sam doesn't care WHICH IRA the funds come from. But your tax obligation is based on the total of ALL your traditional IRAs.

Many folks have put away both tax-deductible contributions, fully taxable when withdrawn, and after-tax contributions which come out tax-free. Sometimes the money has been deposited into the same account, sometimes in more than one—a wiser idea. Before you start taking withdrawals, you must add up all your after-tax contributions and determine what percentage that represents of the total IRA. That is the percentage of each withdrawal that will be tax-free—no matter which account the money actually comes from. Then, of course, you will want to keep track of how much of your after-tax contributions you have removed. The percentage may change each year.

For nearly 30 years, Mike Nickerson has owned and managed a small, full-service accounting practice in the Midcoast. He holds a bachelor's degree in accounting from University of Southern Main and a master's degree in financial planning from Bentley University.

He is a past board member and president of the Maine Society of Certified Public Accountants and currently serves on the Maine Board of Accountancy.

An aged rock musician, Nickerson now finds musical enjoyment playing upright and electric bass in a variety of bands spanning folk to jazz music genres. He and his wife have three grown children, and they enjoy their free time hiking, kayaking, golfing, bicycling and motorcycling.

http://www.nickersonpa.com/