Withdrawals from Partially Nontaxable IRAs

If you've ever made nondeductible contributions to any of your IRAs, then whenever you take a distribution from a non-Roth IRA, part of the distribution will be treated as coming from the nontaxable part.

You must compute the taxable and nontaxable portions of the withdrawals by completing IRS Form 8606, Nondeductible IRAs, and attaching it to your tax return. This can be a complicated process, so make sure that you follow the instructions to the form very closely.