Instructions For Form 8606 - Nondeductible Iras

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Department of the Treasury

Internal Revenue Service

Instructions for Form 8606

Nondeductible IRAs

8606. Instead, see the instructions for

return but are required to file Form

General Instructions

Form 1040, lines 15a and 15b; Form

8606, sign Form 8606 and send it to

Section references are to the Internal

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

the Internal Revenue Service at the

Revenue Code unless otherwise

1040NR, lines 16a and 16b. Also, to

same time and place you would

noted.

find out if any of your contributions to

otherwise file Form 1040, 1040A,

traditional IRAs are deductible, see

or 1040NR.

What’s New

the instructions for Form 1040, line

Definitions

32; Form 1040A, line 17; or Form

IRA contribution limit increased.

1040NR, line 31.

You, and your spouse if filing jointly,

Deemed IRAs

can now contribute up to $4,000

Who Must File

A qualified employer plan (retirement

($4,500 if age 50 or older at the end

File Form 8606 if any of the following

plan) can maintain a separate

of 2005) to your IRA. See Overall

apply.

account or annuity under the plan (a

Contribution Limit for Traditional and

•

You made nondeductible

deemed IRA) to receive voluntary

Roth IRAs that begins on page 2.

contributions to a traditional IRA for

employee contributions. If in 2005

Hurricane tax relief. Special rules

2005.

you had a deemed IRA, use the rules

may apply if you received a

•

You received distributions from a

for either a traditional IRA or a Roth

distribution from your IRA and your

traditional, SEP, or SIMPLE IRA in

IRA depending on which type it was.

main home was located in the

2005 and your basis in traditional

See Pub. 590 for more details.

Hurricane Katrina, Rita, or Wilma

IRAs is more than zero. For this

disaster area, and you sustained an

Traditional IRAs

purpose, a distribution does not

economic loss due to Hurricane

For purposes of Form 8606, a

include a rollover (other than a

Katrina, Rita, or Wilma.

repayment of a qualified hurricane

traditional IRA is an individual

Special rules may also apply if you

retirement account or an individual

distribution), conversion,

received a distribution to purchase or

retirement annuity other than a SEP,

recharacterization, or return of certain

construct a main home in the

contributions.

SIMPLE, or Roth IRA.

•

Hurricane Katrina, Rita, or Wilma

You converted an amount from a

Contributions. An overall

disaster area, but that home was not

traditional, SEP, or SIMPLE IRA to a

contribution limit applies to traditional

purchased or constructed because of

Roth IRA in 2005 (unless you

IRAs and Roth IRAs. See Overall

Hurricane Katrina, Rita, or Wilma.

recharacterized the entire

Contribution Limit for Traditional and

conversion — see page 3).

See Form 8915, Qualified

Roth IRAs that begins on page 2.

•

You received distributions from a

Hurricane Retirement Plan

Contributions to a traditional IRA may

Roth IRA in 2005 (other than a

Distributions and Repayments, for

be fully deductible, partially

rollover, recharacterization, or return

more details.

deductible, or completely

of certain contributions —see

nondeductible.

Purpose of Form

page 7).

Basis. Your basis in traditional IRAs

Note. If you recharacterized a 2005

is the total of all your nondeductible

Use Form 8606 to report:

•

Roth IRA contribution as a traditional

Nondeductible contributions you

contributions to traditional IRAs minus

IRA contribution, or vice versa, treat

the total of all your nontaxable

made to traditional IRAs,

•

the contribution as having been made

Distributions from traditional, SEP,

distributions, adjusted if necessary

to the second IRA, not the first IRA.

(see the instructions for line 2 on

or SIMPLE IRAs, if you have ever

See page 3.

page 6). Keep track of your basis to

made nondeductible contributions to

traditional IRAs,

figure the nontaxable part of your

If you have any qualified

•

future distributions.

Distributions from Roth IRAs, and

hurricane distributions,

•

Conversions from traditional, SEP,

complete Part I of Form 8915

CAUTION

SEP IRAs

or SIMPLE IRAs to Roth IRAs.

before you complete Form 8606.

A simplified employee pension (SEP)

Additional information. See Pub.

You do not have to file Form

is an employer-sponsored plan under

590, Individual Retirement

TIP

8606 solely to report regular

which an employer can make

Arrangements (IRAs), for more

contributions to Roth IRAs.

contributions to traditional IRAs for its

details.

But see What Records Must I Keep?

employees. If you make contributions

on page 5.

If you received distributions

to that IRA (excluding employer

TIP

from a traditional, SEP, or

contributions you make if you are

When and Where To File

SIMPLE IRA in 2005 and you

self-employed), they are treated as

have never made nondeductible

File Form 8606 with your 2005 Form

contributions to a traditional IRA and

contributions to traditional IRAs, do

1040, 1040A, or 1040NR. If you are

may be deductible or nondeductible.

not report the distributions on Form

not required to file an income tax

SEP IRA distributions are reported in

Cat. No. 25399E

Instructions For Form 8606 - Nondeductible Iras - 2005

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