If I take out ROC payments from my traditional IRA, even though ROCs aren't taxed until your cost basis is zero, I would still pay taxes on the payout because its money "withdrawn" from my IRA, right? Can't find any info on this online. Thanks!
ROC taken from a Traditional IRA
Feb 01, 2022
Last reply: 4 years ago
3 Replies
What's an ROC payment?
Ira Smilovitz, EA Leonia, NJ
I didn't know either. According to google it's Return of Capital.
And yes, even ROC withdrawals from a traditional IRA are taxed because you never paid tax on those payments in the first place.
If the original poster is referring to return of capital, then there could be basis in the IRA if he made after-tax contributions to it. In that case, distributions are not ordered as RoC first, then earnings. Each distribution is prorated between taxable earnings and RoC.
Ira Smilovitz, EA Leonia, NJ
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