Instructions For Form 8606 - Nondeductible Iras

generally $5,000 ($6,000 if age 50 or

excluding extensions. If necessary, file

occur in 2010 (you also do not report

older at the end of 2010) and your

an amended return reflecting the

that amount on your 2011 return

spouse’s contribution limit is $5,000

transfer (see page 5). Write “Filed

because it does not apply to the 2011

($6,000 if age 50 or older at the end of

pursuant to section 301.9100-2” on the

tax year). You attach a statement to

2010) as well. But if the combined

amended return.

Form 1040 explaining that (a) you

taxable compensation of both you and

made a conversion of $20,000 from a

Reporting recharacterizations. Any

your spouse is less than $10,000

traditional IRA on May 20, 2010, and

recharacterized conversion or Roth IRA

($11,000 if one spouse is 50 or older at

(b) you recharacterized the entire

rollover from a qualified retirement plan

the end of 2010; $12,000 if both

amount, which was then valued at

will be treated as though the conversion

spouses are 50 or older at the end of

$19,000, back to a traditional IRA on

or rollover had not occurred. Any

2010), see Pub. 590 for special rules.

April 7, 2011.

recharacterized contribution will be

This limit does not apply to employer

2. You made a contribution to a

treated as having been originally

contributions to a SEP or SIMPLE IRA.

traditional IRA and later recharacterized

contributed to the second IRA, not the

Note. Rollovers, Roth IRA

first IRA. The amount transferred must

part or all of it to a Roth IRA. If you

conversions, Roth IRA rollovers from

recharacterized only part of the

include related earnings or be reduced

qualified retirement plans, and

by any loss. In most cases, the related

contribution, report the nondeductible

repayments of qualified disaster

traditional IRA portion of the remaining

earnings that you must transfer are

recovery assistance, qualified recovery

figured by your IRA trustee or

contribution, if any, on Form 8606, Part

assistance, and qualified reservist

custodian. If you need to figure the

I. If you recharacterized the entire

distributions do not affect your

related earnings, see How Do You

contribution, do not report the

contribution limit.

Recharacterize a Contribution? in Pub.

contribution on Form 8606. In either

590. Any earnings or loss that occurred

case, attach a statement to your return

The amount you can contribute

in the first IRA will be treated as having

explaining the recharacterization. If the

to a Roth IRA may also be

occurred in the second IRA. You

recharacterization occurred in 2010,

limited by your modified AGI

CAUTION

cannot deduct any loss that occurred

include the amount transferred from the

(see Contributions and the Maximum

while the funds were in the first IRA.

traditional IRA on Form 1040, line 15a;

Roth IRA Contribution Worksheet on

Also, you cannot take a deduction for a

Form 1040A, line 11a; or Form

page 2).

contribution to a traditional IRA if the

1040NR, line 16a. If the

Taxable compensation includes the

amount is later recharacterized. The

recharacterization occurred in 2011,

following.

following discussion explains how to

report the amount transferred only in

•

Wages, salaries, tips, etc. If you

report the four different types of

the attached statement.

received a distribution from a

recharacterizations, including the

Example. You are single, covered

nonqualified deferred compensation

statement that must be attached to your

by a retirement plan, and you

plan or nongovernmental section 457

return explaining the recharacterization.

contributed $4,000 to a new traditional

plan that is included in Form W-2, box

1. You converted an amount from a

IRA on May 27, 2010. On February 24,

1, or in Form 1099-MISC, box 7, do not

traditional, SEP, or SIMPLE IRA to a

2011, you determine that your 2010

include that distribution in taxable

Roth IRA in 2010 and later

modified AGI will limit your traditional

compensation. The distribution should

recharacterized all or part of the

IRA deduction to $1,000. The value of

be shown in (a) Form W-2, box 11, (b)

amount back to a traditional, SEP, or

your traditional IRA on that date is

Form W-2, box 12, with code Z, or (c)

SIMPLE IRA. If you only

$4,400. You decide to recharacterize

Form 1099-MISC, box 15b. If it is not,

recharacterized part of the amount

$3,000 of the traditional IRA

contact your employer for the amount

converted, report the amount not

contribution as a Roth IRA contribution,

of the distribution.

recharacterized on Form 8606. If you

and have $3,300 ($3,000 contribution

•

Nontaxable combat pay if you were a

recharacterized the entire amount, do

plus $300 related earnings) transferred

member of the U.S. Armed Forces.

not report the recharacterization on

from your traditional IRA to a Roth IRA

•

Self-employment income. If you are

Form 8606. In either case, attach a

in a trustee-to-trustee transfer. You

self-employed (a sole proprietor or a

statement to your return explaining the

deduct the $1,000 traditional IRA

partner), taxable compensation is your

recharacterization and include the

contribution on Form 1040. You are not

net earnings from your trade or

amount converted from the traditional,

required to file Form 8606, but you

business (provided your personal

SEP, or SIMPLE IRA in the total on

must attach a statement to your return

services are a material

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

explaining the recharacterization. The

income-producing factor) reduced by

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

statement indicates that you contributed

your deduction for contributions made

recharacterization occurred in 2010,

$4,000 to a traditional IRA on May 27,

on your behalf to retirement plans and

also include the amount transferred

2010; recharacterized $3,000 of that

the deduction allowed for one-half of

back from the Roth IRA on that line. If

contribution on February 24, 2011, by

your self-employment tax.

the recharacterization occurred in 2011,

transferring $3,000 plus $300 of related

•

Alimony and separate maintenance.

report the amount transferred only in

earnings from your traditional IRA to a

See Pub. 590 for details.

the attached statement, and not on

Roth IRA in a trustee-to-trustee

your 2010 or 2011 tax return (a 2011

transfer; and that all $1,000 of the

Recharacterizations

Form 1099-R should be sent to you by

remaining traditional IRA contribution is

January 31, 2012, stating that you

deducted on Form 1040. You do not

Generally, you can recharacterize

made a recharacterization of an amount

report the $3,300 distribution from your

(correct) an IRA contribution, Roth IRA

converted in the prior year).

traditional IRA on your 2010 Form 1040

conversion, or a Roth IRA rollover from

because the distribution occurred in

Example. You are married filing

a qualified retirement plan by making a

2011. You do not report the distribution

trustee-to-trustee transfer from one IRA

jointly and converted $20,000 from your

on your 2011 Form 1040 because the

to another type of IRA.

traditional IRA to a new Roth IRA on

recharacterization related to 2010 and

Trustee-to-trustee transfers are made

May 20, 2010. On April 7, 2011, you

was explained in an attachment to your

directly between financial institutions or

decide to recharacterize the

2010 return.

within the same financial institution.

conversion. The value of the Roth IRA

You generally must make the transfer

on that date is $19,000. You

3. You made a contribution to a

by the due date of your return

recharacterize the conversion by

Roth IRA and later recharacterized part

(including extensions) and reflect it on

transferring that entire amount to a

or all of it to a traditional IRA. Report

your return. However, if you timely filed

traditional IRA in a trustee-to-trustee

the nondeductible traditional IRA

your return without making the transfer,

transfer. You report $20,000 on Form

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

you can make the transfer within 6

1040, line 15a. You do not include the

you did not recharacterize the entire

months of the due date of your return,

$19,000 on line 15a because it did not

contribution, do not report the

-3-

Instructions for Form 8606 (2010)

Instructions For Form 8606 - Nondeductible Iras - 2010 Page 3

Related Articles

Related forms

Related Categories