Instructions For Form 8606 - Nondeductible Iras

2011. You do not report the distribution

the attached statement, and not on

changes on the amended return (for

on your 2011 Form 1040 because the

your 2010 or 2011 tax return (a 2011

example, if you reported the

recharacterization related to 2010 and

Form 1099-R should be sent to you by

contributions as excess contributions

was explained in an attachment to your

January 31, 2012, stating that you

on your original return, include an

2010 return.

made a recharacterization of an amount

amended Form 5329 reflecting that the

in the prior year).

withdrawn contributions are no longer

3. You made a contribution to a

treated as having been contributed).

Roth IRA and later recharacterized part

Example. You are single and you

or all of it to a traditional IRA. Report

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

In most cases, the related earnings

the nondeductible traditional IRA

plan to a new Roth IRA on July 20,

that you must withdraw are figured by

portion, if any, on Form 8606, Part I. If

2010. On March 25, 2011, you decide

your IRA trustee or custodian. If you

you did not recharacterize the entire

to recharacterize the rollover. The value

need to figure the related earnings on

contribution, do not report the

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

IRA contributions that were returned to

remaining Roth IRA portion of the

You recharacterize the rollover by

you, see Contributions Returned Before

contribution on Form 8606. Attach a

transferring that entire amount to a

Due Date of Return in Pub. 590. If you

statement to your return explaining the

traditional IRA in a trustee-to-trustee

made a contribution or distribution while

recharacterization. If the

transfer. You report $50,000 on Form

the IRA held the returned contribution,

recharacterization occurred in 2010,

1040, line 16a. You do not include the

see Pub. 590.

include the amount transferred from the

$49,000 on line 15a because it did not

If you made a contribution for 2009

Roth IRA on Form 1040, line 15a; Form

occur in 2010 (you also do not report

and you had it returned to you in 2010

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

that amount on your 2011 return

as described above, do not report the

16a. If the recharacterization occurred

because it does not apply to the 2011

distribution on your 2010 tax return.

in 2011, report the amount transferred

tax year). You are not required to file

Instead, report it on your 2009 original

only in the attached statement, and not

Form 8606, but you must attach a

or amended return in the manner

on your 2010 or 2011 tax return.

statement to Form 1040 explaining that

described above.

(a) you made a rollover of $50,000 from

Example. You are single, covered

a 401(k) plan to a Roth IRA on July 20,

by a retirement plan, and you

Example. On May 28, 2010, you

2010, and (b) you recharacterized the

contributed $4,000 to a new Roth IRA

contributed $4,000 to your traditional

entire amount, which was then valued

on June 16, 2010. On December 29,

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

at $49,000, to a traditional IRA on

2010, you determine that your 2010

prior to the contribution. On December

March 25, 2011.

modified AGI will allow a full traditional

29, 2010, when you are age 57 and the

IRA deduction. You decide to

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

recharacterize the Roth IRA

you cannot make the entire contribution

Return of IRA

contribution as a traditional IRA

because your taxable compensation for

Contributions

contribution and have $4,200, the

the year will be only $3,000. You

balance in the Roth IRA account

decide to have $1,000 of the

If, in 2010 or 2011, you made traditional

($4,000 contribution plus $200 related

contribution returned to you and

IRA contributions or Roth IRA

earnings), transferred from your Roth

withdraw $1,073 from your IRA ($1,000

contributions for 2010 and you had

IRA to a traditional IRA in a

contribution plus $73 earnings). You did

those contributions returned to you with

trustee-to-trustee transfer. You deduct

not make any other withdrawals or

any related earnings (or minus any

the $4,000 traditional IRA contribution

contributions. You are not required to

loss) by the due date (including

on Form 1040. You are not required to

file Form 8606. You deduct the $3,000

extensions) of your 2010 tax return, the

file Form 8606, but you must attach a

remaining contribution on Form 1040.

returned contributions are treated as if

statement to your return explaining the

You include $1,073 on Form 1040, line

they were never contributed. Do not

recharacterization. The statement

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

report the contribution or distribution on

indicates that you contributed $4,000 to

statement to your tax return explaining

Form 8606 or take a deduction for the

a new Roth IRA on June 16, 2010;

the distribution. Because you properly

contribution. However, you must report

recharacterized that contribution on

removed the excess contribution with

a distribution that was contributed in

December 29, 2010, by transferring

the related earnings by the due date of

2010 and any related earnings on your

$4,200, the balance in the Roth IRA, to

your tax return, you are not subject to

2010 Form 1040, lines 15a and 15b;

a traditional IRA in a trustee-to-trustee

the additional 6% tax on excess

Form 1040A, lines 11a and 11b; or

transfer; and that $4,000 of the

contributions, reported on Form 5329.

Form 1040NR, lines 16a and 16b.

traditional IRA contribution is deducted

However, because you were under age

Attach a statement explaining the

on Form 1040. You include the $4,200

at the time of the distribution, the

distribution. You cannot deduct any loss

distribution on your 2010 Form 1040,

$73 of earnings is subject to the

that occurred (see Pub. 590 for an

line 15a.

additional 10% tax on early

exception if you withdrew the entire

distributions. You include $7.30 on

4. You rolled over an amount from a

amount in all your traditional or Roth

Form 1040, line 58.

qualified retirement plan to a Roth IRA

IRAs). Also, if you were under age 59

in 2010 and later recharacterized all or

at the time of a distribution with related

Return of Excess

part of the amount to a traditional IRA.

earnings, you generally are subject to

If you only recharacterized part of the

Traditional IRA

the additional 10% tax on early

amount rolled over, report the amount

distributions (see Form 5329, Additional

not recharacterized on Form 8606. If

Contributions

Taxes on Qualified Plans (Including

you recharacterized the entire amount,

IRAs) and Other Tax-Favored

The return (distribution) in 2010 of

do not report the recharacterization on

Accounts).

excess traditional IRA contributions for

Form 8606. In either case, attach a

years prior to 2010 is not taxable if all

statement to your return explaining the

If you timely filed your 2010 tax

three of the following apply.

recharacterization and include the

return without withdrawing a

amount of the original rollover on Form

contribution that you made in 2010, you

1. The distribution was made after

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

can still have the contribution returned

the due date, including extensions, of

or Form 1040NR, line 17a. If the

to you within 6 months of the due date

your tax return for the year for which

recharacterization occurred in 2010,

of your 2010 tax return, excluding

the contribution was made (if the

also include the amount transferred

extensions. If you do, file an amended

distribution was made earlier, see

from the Roth IRA on Form 1040, line

return with “Filed pursuant to section

Return of IRA Contributions earlier).

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

301.9100-2” written at the top. Report

2. The total contributions (excluding

1040NR, line 16a. If the

any related earnings on the amended

rollovers) to your traditional and SEP

recharacterization occurred in 2011,

return and include an explanation of the

IRAs for the year for which the excess

report the amount transferred only in

withdrawal. Make any other necessary

contribution was made did not exceed:

-4-

Instructions for Form 8606 (2010)

Instructions For Form 8606 - Nondeductible Iras - 2010 Page 4

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