Instructions For Form 8606 - 2016 (Page 5 of 13) in pdf

4. You rolled over an amount from a

the amount of the distribution of the

the year will be only $3,000. You decide

qualified retirement plan to a Roth IRA

returned contributions you made in

to have $1,000 of the contribution

in 2016 and later recharacterized all or

2016 and any related earnings on your

returned to you and withdraw $1,073

part of the amount in a trustee-to-trustee

2016 Form 1040, line 15a; Form 1040A,

from your IRA ($1,000 contribution plus

transfer to a traditional IRA. Don’t report

line 11a; or Form 1040NR, line 16a.

$73 earnings). You didn’t make any

the rollover (whether or not you

Also include the related earnings on

other withdrawals or contributions. You

recharacterized all or part of it) or the

your 2016 Form 1040, line 15b; Form

don’t file Form 8606. You deduct the

recharacterization on Form 8606. Attach

1040A, line 11b; or Form 1040NR,

$3,000 remaining contribution on Form

a statement to your return explaining the

line 16b. Attach a statement explaining

1040. You include $1,073 on Form

recharacterization and include the

the distribution. You can’t deduct any

1040, line 15a, and $73 on line 15b. You

amount of the original rollover on Form

loss that occurred (see Pub. 590-B for

attach a statement to your tax return

1040, line 16a; Form 1040A, line 12a; or

an exception if you withdrew the entire

explaining the distribution. Because you

Form 1040NR, line 17a. If the

amount in all your traditional or Roth

properly removed the excess

recharacterization occurred in 2016,

IRAs). Also, if you were under age 59

contribution with the related earnings by

also include the amount transferred

at the time of a distribution with related

the due date of your tax return, you

from the Roth IRA on Form 1040,

earnings, you generally are subject to

aren’t subject to the additional 6% tax

line 15a; Form 1040A, line 11a; or Form

the additional 10% tax on early

on excess contributions, reported on

1040NR, line 16a. If the

distributions (see Form 5329, Additional

Form 5329. However, because you

recharacterization occurred in 2017,

Taxes on Qualified Plans (Including

were under age 59

at the time of the

report the amount transferred from the

IRAs) and Other Tax-Favored

distribution, the $73 of earnings is

Roth IRA only in the attached statement,

Accounts).

subject to the additional 10% tax on

and not on your 2016 or 2017 tax return

early distributions. You include $7.30 on

If you timely filed your 2016 tax return

(a 2017 Form 1099-R should be sent to

Form 1040, line 59.

without withdrawing a contribution that

you by January 31, 2018, stating that

you made in 2016, you can still have the

Return of Excess

you made a recharacterization of an

contribution returned to you within 6

amount in the prior year).

Traditional IRA

months of the due date of your 2016 tax

Example. You are single and you

Contributions

return, excluding extensions. If you do,

rolled over $50,000 from your 401(k)

file an amended return with “Filed

The return (distribution) in 2016 of

plan to a new Roth IRA on July 20,

pursuant to section 301.9100-2” written

excess traditional IRA contributions for

2016. On March 25, 2017, you decide to

at the top. Report any related earnings

years prior to 2016 isn’t taxable if all

recharacterize the rollover. The value of

on the amended return and include an

three of the following apply.

the Roth IRA on that date is $49,000.

explanation of the withdrawn

1. The distribution was made after

You recharacterize the rollover by

contribution. Make any other necessary

the due date, including extensions, of

transferring that entire amount to a

changes on the amended return (for

your tax return for the year for which the

traditional IRA in a trustee-to-trustee

example, if you reported the

contribution was made (if the

transfer. You report $50,000 on Form

contributions as excess contributions on

distribution was made earlier, see

1040, line 16a. You don’t include the

your original return, include an amended

Return of IRA

Contributions, earlier).

$49,000 on line 15a because the

Form 5329 reflecting that the withdrawn

transfer to the traditional IRA didn’t

2. No deduction was allowable

contributions are no longer treated as

occur in 2016 (you also don’t report that

(without regard to the modified AGI

having been contributed).

amount on your 2017 return because

limitation) or taken for the excess

In most cases, the related earnings

the recharacterization doesn’t apply to

contributions.

that you must withdraw are figured by

the 2017 tax year). You don’t file Form

3. The total contributions (excluding

your IRA trustee or custodian. If you

8606. You attach a statement to Form

rollovers) to your traditional and SEP

need to figure the related earnings on

1040 explaining that (a) you made a

IRAs for the year for which the excess

IRA contributions that were returned to

rollover of $50,000 from a 401(k) plan to

contributions were made didn’t exceed

you, see Contributions Returned Before

a Roth IRA on July 20, 2016, and (b)

the amounts shown in the following

Due Date of Return in chapter 1 of Pub.

you recharacterized the entire amount,

table.

590-A. If you made a contribution or

which was then valued at $49,000, to a

distribution while the IRA held the

traditional IRA on March 25, 2017.

returned contribution, see Pub. 590-A.

Return of IRA

If you made a contribution for 2015

Contributions

and you had it returned to you in 2016

as described above, don’t report the

If, in 2016, you made traditional IRA

distribution on your 2016 tax return.

contributions or Roth IRA contributions

Instead, report it on your 2015 original

for 2016 and you had those

or amended return in the manner

contributions returned to you with any

described above.

related earnings (or minus any loss) by

the due date (including extensions) of

Example. On May 28, 2016, you

your 2016 tax return, the returned

contributed $4,000 to your traditional

contributions are treated as if they were

IRA. The value of the IRA was $18,000

never contributed. Don’t report the

prior to the contribution. On December

contribution or distribution on Form

29, 2016, when you are age 57 and the

8606 or take a deduction for the

value of the IRA is $23,600, you realize

contribution. However, you must include

you can’t make the entire contribution

because your taxable compensation for

Instructions for Form 8606 (2016)

Instructions For Form 8606 - 2016 Page 5

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