What Is My Roth IRA Basis and How Is It Calculated?

Your Roth IRA basis is the total after-tax money you’ve put into the account — direct contributions plus the taxed portion of any conversions — minus whatever you’ve already withdrawn. That number tells you exactly how much you can pull out without owing income tax or the 10% early withdrawal penalty. The IRS keeps no master record of it. Tracking your basis is your job, and getting it wrong can mean paying tax twice on the same dollars or triggering a 20% accuracy-related penalty.¹

What Counts Toward Your Basis

Basis has two layers. The first is regular contributions: every dollar you deposited directly into the Roth from your bank account or paycheck. Because you already paid income tax on that money before it went in, the IRS lets you take those dollars back at any age, for any reason, without additional tax or penalty.²

Contribution basis is a static number. It doesn’t grow when your investments gain value and doesn’t shrink when they lose value. It moves only when you add new money or withdraw contribution dollars. For 2026, the annual contribution cap is $7,500, with an extra $1,100 catch-up allowance if you’re 50 or older, bringing that year’s maximum to $8,600.³ In years when your income put you in the phase-out range, only the reduced contribution you were actually allowed counts toward basis.

The second layer is conversion and rollover basis: money you moved into the Roth from a traditional IRA, 401(k), or similar pre-tax account. When you convert, you pay income tax that year on the pre-tax portion. Once that tax is paid, those dollars become Roth basis and get the same after-tax status as your direct contributions.²

Conversions carry a wrinkle direct contributions don’t. Each conversion starts its own five-year clock on January 1 of the year you make it. If you pull converted dollars out before age 59½ and before that five years is up, you’ll owe the 10% early withdrawal penalty on the taxable portion of that conversion, even though income tax was already paid on it. After 59½, the penalty disappears regardless of when you converted.⁴

The Pro-Rata Rule

If your traditional IRA holds a mix of deductible (pre-tax) and nondeductible (after-tax) money, you can’t select which dollars to convert. The IRS treats all your traditional IRAs as one combined pool, and every conversion pulls a proportional share of pre-tax and after-tax money.⁵ If 80% of your combined traditional IRA balance is pre-tax, then 80% of any conversion is taxable, and only that 80% becomes taxable conversion basis. The remaining 20% was already after-tax and becomes nontaxable conversion basis. This is where people routinely miscount, because they assume they converted only the after-tax slice.

How to Calculate It

The math is straightforward: add up everything that went in, subtract everything that came out.

Total your regular contributions. Pull the Box 10 amount from every year’s Form 5498 and add them up.
Total your conversion and rollover amounts, using past Form 8606 filings or Box 3 from Form 5498.⁶
Add the two totals. That is your lifetime basis before withdrawals.
Subtract any prior distributions using the IRS ordering rules: contributions come off first, then conversions, then earnings.

Say you contributed $5,000 a year for 10 years ($50,000 total) and converted $30,000 from a traditional IRA five years ago, paying tax on the full amount. Your lifetime basis is $80,000. If you withdrew $15,000 last year, the ordering rules treat that as coming entirely from contributions, leaving your remaining contribution basis at $35,000 and your conversion basis untouched at $30,000. Total remaining basis: $65,000.

Things get harder when you switch custodians, inherit an account, or go through a divorce. Each of those can shift basis in ways that aren’t obvious from a single year’s statement. If your records are incomplete and you’ve had multiple conversions across different years, paying for professional reconstruction is often worth it.

Where to Find Your Records

Reconstructing basis usually comes down to two forms. You need copies going back to the first year you contributed or converted.

Form 5498

Your IRA custodian files Form 5498 with the IRS every year and sends you a copy. Roth IRA contributions appear in Box 10, not Box 1 (which is for traditional IRAs). Roth conversions from a traditional IRA appear in Box 3.⁷ If your account has been open 15 years, you need 15 years of these forms. Custodians only keep records for a limited time. If you’re missing older ones, check your past tax returns or request transcripts from the IRS.

Form 8606

Form 8606 is where basis tracking gets formal. Part II records conversions from traditional IRAs to Roth IRAs. Part III tracks Roth IRA basis when you take distributions:⁶

Line 22 shows your basis in regular Roth contributions: the running total of direct contributions minus any contribution amounts previously distributed.
Line 24 shows your basis in Roth conversions and rollovers: the running total of conversion amounts minus any conversion amounts previously distributed.

Add Lines 22 and 24 for your total basis. If you’ve been filing Form 8606 every year, last year’s return already carries the running totals. If you haven’t filed it, you’ll rebuild the numbers from Form 5498 history and past returns.

How the Ordering Rules Turn Basis Into Tax-Free Dollars

You don’t get to choose which dollars leave a Roth IRA. Federal law applies a strict order to every distribution:⁸

Regular contributions come out first. No tax, no penalty, no age requirement.
Conversions and rollovers come out next, oldest first. Within each conversion, the taxable portion comes out before the nontaxable portion. The five-year and age-59½ penalty rule above applies here.
Earnings come out last. They’re taxable and potentially penalized unless the distribution qualifies (you’re at least 59½ and the account has met the five-year holding period).²

This ordering is what makes the basis number matter. As long as a withdrawal stays inside your basis, you’re pulling out dollars you already paid tax on. Cross that line and you’re into earnings, where tax and possible penalty begin.

Events That Adjust Your Basis

Excess Contributions

Contribute more than the annual limit and the excess doesn’t count as basis. You have until your tax filing deadline, including extensions, to withdraw the excess and any earnings it generated. The withdrawn contribution comes out of your basis as if it were never made, and the earnings portion is taxable as ordinary income in the year of the contribution. Miss the deadline and you’ll owe a 6% excise tax on the excess for every year it stays in the account.⁹

Inherited Roth IRAs

When someone inherits a Roth IRA, the original owner’s basis carries over. Withdrawals of contributions from an inherited Roth are tax-free, just as they were for the original owner.¹⁰ Earnings are usually tax-free too, but if the original owner hadn’t yet met the five-year holding period at death, earnings withdrawn before that period ends are taxable to the beneficiary. The five-year clock doesn’t reset. It continues from the year the original owner first funded any Roth IRA.⁴ The same ordering rules apply, so most beneficiaries work through the inherited basis long before they touch taxable earnings.

Divorce Transfers

When a Roth IRA is divided in a divorce, the transfer runs through a court order or separation agreement, not a QDRO (which applies only to employer plans like 401(k)s). The IRS treats a transfer incident to divorce as non-taxable, and a proportional share of the basis moves with the transferred funds. The Form 8606 instructions require both spouses to adjust Lines 22 and 24 to reflect basis received or transferred.⁶ If your ex handled the finances and you’re now the account holder, get the basis documentation in writing during the proceedings. Reconstructing it later without cooperation is expensive and sometimes impossible.

What Getting It Wrong Costs

Misstating basis has real dollar consequences. The most common mistake is failing to file Form 8606 in years you make nondeductible traditional IRA contributions (the setup step for backdoor Roth conversions). The IRS imposes a $50 penalty for each missed filing, and overstating nondeductible contributions carries a $100 penalty per occurrence.⁶

The bigger risk is downstream. Understate your basis and you’ll pay tax on money that was already taxed. The IRS has no reason to correct you. Overstate it and you’ll underreport taxable income on distributions, which can trigger the 20% accuracy-related penalty on top of the taxes owed.¹ The filing penalty is annoying. Treating earnings as basis on a six-figure distribution is a genuinely costly mistake. File Form 8606 every year, even when nothing seems to change. That paper trail is the only thing standing between you and double taxation.

1
Internal Revenue Service. Accuracy-Related Penalty
2
Office of the Law Revision Counsel. 26 USC 408A – Roth IRAs
3
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
4
Internal Revenue Service. Publication 590-B, Distributions From Individual Retirement Arrangements
5
Office of the Law Revision Counsel. 26 USC 408 – Individual Retirement Accounts
6
Internal Revenue Service. Instructions for Form 8606
7
Internal Revenue Service. 2025 Instructions for Forms 1099-R and 5498
8
Internal Revenue Service. Publication 590-B, Distributions From Individual Retirement Arrangements
9
Office of the Law Revision Counsel. 26 USC 4973 – Tax on Excess Contributions to Certain Tax-Favored Accounts
10
Internal Revenue Service. Retirement Topics – Beneficiary