Is that IRA a rollover or is it cash flow?

If you are pulling historical cash flow from a 1040 (what really happened in the checkbook), you need to include IRA distributions if they actually received the money.

If you are pulling recurring cash flow from a 1040 (what will happen in the checkbook next year), you need to include IRA distributions if they actually received the money and it is continuing.

Here are your clues

• If there is an entry on Line 15a (total) but zero on Line 15b (taxable):
• It may be a rollover of a traditional IRA which means it is not cash flow
• Some tax preparation software 'types in' the word ROLLOVER in the left column
• It may be a distribution of a ROTH IRA which means it is cash flow
  
• The IRA must have been in place at least five years

Even if it is cash flow, it may be a one-time or lump-sum distribution.

• If you know they are under 59 1/2 and see no penalty on page two of the 1040, Line 38 (2009 forms) that is a hint it may be a continuing payment
• However, there are some exceptions to the penalty on early withdrawal for major medical, first time home buyers, college, etc.
• If you have several years tax returns and it is a similar amount each year, maybe it is recurring.

Notice I said 'clues'.

The bottom line

If you want or need to use IRA distributions as a continuing source of cash flow, you probably have to ask if it is recurring. Then you may want statements from the IRA or IRAs to show that they could keep up that level of withdrawals long enough to provide the cash flow needed to service your loan.