Instructions For Form 8606 - Nondeductible Iras

Do not include on line 1

$2,000 in January 2006, of which

2005 from the amount you would

contributions that you had returned to

$3,000 are deductible and $1,000 are

otherwise enter on line 6. If the result

you with the related earnings (or less

nondeductible. You choose $1,000 of

is zero or less, enter -0-.

any loss). See page 4.

your contribution in 2005 to be

Example. You received a $30,000

nondeductible. You enter the $1,000

qualified hurricane distribution (as the

Line 2

on line 1, but not line 4, and it

result of Hurricane Katrina) on

becomes part of your basis for 2005.

If this is the first year you are required

October 15, 2005, from your

to file Form 8606, enter -0-.

Although the contributions to

traditional IRA. On December 15,

Otherwise, use the chart below to find

traditional IRAs for 2005 that you

2005, you made a repayment of

the amount to enter on line 2.

made from January 1, 2006, through

$15,000 to your traditional IRA. The

April 17, 2006, can be treated as

However, you may need to enter

value of all your traditional, SEP, and

nondeductible, they are not included

SIMPLE IRAs as of December 31,

an amount other than -0- or adjust the

in figuring the nontaxable part of any

2005, was $50,000. You had no

amount from the chart if your basis

distributions you received in 2005.

outstanding rollovers. You would

changed because of any of the

following.

enter $35,000 ($50,000 minus the

Line 6

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$15,000 repayment) on line 6.

You had a return of excess

Enter the total value of all your

traditional IRA contributions (see

Line 7

traditional, SEP, and SIMPLE IRAs

page 5).

•

as of December 31, 2005, plus any

Incident to divorce, you transferred

outstanding rollovers. A statement

If you received a distribution in

or received part or all of a traditional

should be sent to you by January 31,

2005 from a traditional, SEP,

IRA (see the next to last item under

2006, showing the value of each IRA

or SIMPLE IRA, and you also

Line 7 that begins on this page).

CAUTION

•

on December 31, 2005. However, if

made contributions for 2005 to a

You rolled over any nontaxable

you recharacterized any amounts,

traditional IRA that may not be fully

portion of your qualified employer

enter on line 6 the total value taking

deductible because of the income

plan to a traditional or SEP IRA.

into account all recharacterizations,

limits, you must make a special

Include the nontaxable portion on

including recharacterizations made

computation before completing the

line 2.

after December 31, 2005.

rest of this form. For details, including

how to complete Form 8606, see Are

IF the last Form

THEN enter on

For line 6, a rollover is a tax-free

Distributions Taxable? in Chapter 1 of

8606 you filed

line 2...

distribution from one traditional, SEP,

was for...

Pub. 590.

or SIMPLE IRA that is contributed to

another traditional, SEP, or SIMPLE

2004, 2003, 2002, The amount from

Do not include any of the following

IRA. The rollover must be completed

or 2001

line 14 of that

on line 7.

•

within 60 days of receiving the

Form 8606

Distributions that you converted to

distribution from the first IRA. An

a Roth IRA.

A year after 1992

The amount from

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outstanding rollover is any amount

Recharacterizations.

and before 2001

line 12 of that

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distributed after October 31, 2005,

Distributions that you rolled over by

Form 8606

that was rolled over in 2006, but

December 31, 2005, and any

within the 60-day rollover period.

A year after 1988

The amount from

outstanding rollovers included on

and before 1993

line 14 of that

line 6.

The IRS may waive the 60-day

•

Form 8606

Distributions you rolled over to a

requirement if failing to waive it would

be against equity or good conscience,

qualified employer plan.

1988

The total of the

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Distributions that are treated as a

such as situations where a casualty,

amounts on lines 7

return of contributions under Return

disaster, or other events beyond your

and 16 of that

of IRA Contributions on page 4.

reasonable control prevented you

Form 8606

•

from meeting the 60-day requirement.

Distributions that are treated as a

1987

The total of the

return of excess contributions under

Also, the 60-day period may be

amounts on lines 4

Return of Excess Traditional IRA

extended if you had a frozen deposit.

and 13 of that

See Pub. 590 for details.

Contributions on page 5.

Form 8606

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Distributions of excess

Note. Do not include a rollover from a

contributions due to incorrect rollover

traditional or SEP IRA to a qualified

information. If an excess contribution

Line 4

employer plan even if it was an

in your traditional IRA is the result of

outstanding rollover.

If you made contributions to

a rollover from a qualified retirement

traditional IRAs for 2005 in 2005 and

Also include on line 6, any

plan and the excess occurred

2006 and you have both deductible

qualified distributions you repaid

because the information the plan was

and nondeductible contributions, you

before March 1, 2006, if the

required to give you was incorrect,

can choose to treat the contributions

distributions were to be used to

the distribution of the excess

made in 2005 first as nondeductible

purchase or construct a main home in

contribution is not taxable. Attach a

contributions and then as deductible

the Hurricane Katrina, Rita, or Wilma

statement to your return explaining

contributions, or vice versa. But the

disaster area, but that home was not

the distribution and include the

amount on line 4 cannot be less than

purchased or constructed because of

amount of the distribution on Form

the excess, if any, of the amount on

Hurricane Katrina, Rita, or Wilma.

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

line 1 over the contributions you

Repayments of qualified hurricane

or Form 1040NR, line 16a. See Pub.

actually made in 2005.

distributions. Subtract the total

590 for more details.

•

Example. You made contributions

amount of repayments of qualified

Distributions that are incident to

for 2005 of $2,000 in May 2005 and

hurricane distributions you made in

divorce. The transfer of part or all of

-6-

Instructions For Form 8606 - Nondeductible Iras - 2005 Page 6

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