Instructions For Form 8606 - Nondeductible Iras

remaining Roth IRA portion of the

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

need to figure the related earnings on

contribution on Form 8606. Attach a

You recharacterize the rollover by

IRA contributions that were returned to

statement to your return explaining the

transferring that entire amount to a

you, see Contributions Returned Before

recharacterization. If the

traditional IRA in a trustee-to-trustee

Due Date of Return in Pub. 590. If you

recharacterization occurred in 2010,

transfer. You report $50,000 on Form

made a contribution or distribution while

include the amount transferred from the

1040, line 16a. You do not include the

the IRA held the returned contribution,

Roth IRA on Form 1040, line 15a; Form

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

see Pub. 590.

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

occur in 2010 (you also do not report

If you made a contribution for 2009

16a. If the recharacterization occurred

that amount on your 2011 return

and you had it returned to you in 2010

in 2011, report the amount transferred

because it does not apply to the 2011

as described above, do not report the

only in the attached statement, and not

tax year). You are not required to file

distribution on your 2010 tax return.

on your 2010 or 2011 tax return.

Form 8606, but you must attach a

Instead, report it on your 2009 original

statement to Form 1040 explaining that

Example. You are single, covered

or amended return in the manner

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

by a retirement plan, and you

described above.

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

contributed $4,000 to a new Roth IRA

Example. On May 28, 2010, you

2010, and (b) you recharacterized the

on June 16, 2010. On December 29,

contributed $4,000 to your traditional

entire amount, which was then valued

2010, you determine that your 2010

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

at $49,000, to a traditional IRA on

modified AGI will allow a full traditional

prior to the contribution. On December

March 25, 2011.

IRA deduction. You decide to

29, 2010, when you are age 57 and the

recharacterize the Roth IRA

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

contribution as a traditional IRA

Return of IRA

you cannot make the entire contribution

contribution and have $4,200, the

because your taxable compensation for

Contributions

balance in the Roth IRA account

the year will be only $3,000. You

($4,000 contribution plus $200 related

If, in 2010 or 2011, you made traditional

decide to have $1,000 of the

earnings), transferred from your Roth

IRA contributions or Roth IRA

contribution returned to you and

IRA to a traditional IRA in a

contributions for 2010 and you had

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

trustee-to-trustee transfer. You deduct

those contributions returned to you with

contribution plus $73 earnings). You did

the $4,000 traditional IRA contribution

any related earnings (or minus any

not make any other withdrawals or

on Form 1040. You are not required to

loss) by the due date (including

contributions. You are not required to

file Form 8606, but you must attach a

extensions) of your 2010 tax return, the

file Form 8606. You deduct the $3,000

statement to your return explaining the

returned contributions are treated as if

remaining contribution on Form 1040.

recharacterization. The statement

they were never contributed. Do not

You include $1,073 on Form 1040, line

indicates that you contributed $4,000 to

report the contribution or distribution on

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

a new Roth IRA on June 16, 2010;

Form 8606 or take a deduction for the

statement to your tax return explaining

recharacterized that contribution on

contribution. However, you must report

the distribution. Because you properly

December 29, 2010, by transferring

a distribution that was contributed in

removed the excess contribution with

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

2010 and any related earnings on your

the related earnings by the due date of

a traditional IRA in a trustee-to-trustee

2010 Form 1040, lines 15a and 15b;

your tax return, you are not subject to

transfer; and that $4,000 of the

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

the additional 6% tax on excess

traditional IRA contribution is deducted

Form 1040NR, lines 16a and 16b.

contributions, reported on Form 5329.

on Form 1040. You include the $4,200

Attach a statement explaining the

However, because you were under age

distribution on your 2010 Form 1040,

distribution. You cannot deduct any loss

at the time of the distribution, the

line 15a.

that occurred (see Pub. 590 for an

$73 of earnings is subject to the

4. You rolled over an amount from a

exception if you withdrew the entire

additional 10% tax on early

qualified retirement plan to a Roth IRA

amount in all your traditional or Roth

distributions. You include $7.30 on

in 2010 and later recharacterized all or

IRAs). Also, if you were under age 59

Form 1040, line 58.

part of the amount to a traditional IRA.

at the time of a distribution with related

If you only recharacterized part of the

Return of Excess

earnings, you generally are subject to

amount rolled over, report the amount

the additional 10% tax on early

Traditional IRA

not recharacterized on Form 8606. If

distributions (see Form 5329, Additional

you recharacterized the entire amount,

Taxes on Qualified Plans (Including

Contributions

do not report the recharacterization on

IRAs) and Other Tax-Favored

Form 8606. In either case, attach a

The return (distribution) in 2010 of

Accounts).

statement to your return explaining the

excess traditional IRA contributions for

If you timely filed your 2010 tax

recharacterization and include the

years prior to 2010 is not taxable if all

return without withdrawing a

amount of the original rollover on Form

three of the following apply.

contribution that you made in 2010, you

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

1. The distribution was made after

can still have the contribution returned

or Form 1040NR, line 17a. If the

the due date, including extensions, of

to you within 6 months of the due date

recharacterization occurred in 2010,

your tax return for the year for which

of your 2010 tax return, excluding

also include the amount transferred

the contribution was made (if the

extensions. If you do, file an amended

from the Roth IRA on Form 1040, line

distribution was made earlier, see

return with “Filed pursuant to section

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

Return of IRA Contributions on this

301.9100-2” written at the top. Report

1040NR, line 16a. If the

page).

any related earnings on the amended

recharacterization occurred in 2011,

2. The total contributions (excluding

return and include an explanation of the

report the amount transferred only in

rollovers and conversions) to your

withdrawal. Make any other necessary

the attached statement, and not on

traditional and SEP IRAs for the year

changes on the amended return (for

your 2010 or 2011 tax return (a 2011

for which the excess contribution was

example, if you reported the

Form 1099-R should be sent to you by

made did not exceed:

contributions as excess contributions

January 31, 2012, stating that you

a. $5,000 ($6,000 if age 50 or older

on your original return, include an

made a recharacterization of an amount

at the end of the year) for 2008 or

amended Form 5329 reflecting that the

in the prior year).

2009,

withdrawn contributions are no longer

Example. You are single and you

b. $4,000 ($5,000 if age 50 or older

treated as having been contributed).

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

at the end of the year) for 2007 or

plan to a new Roth IRA on July 20,

In most cases, the related earnings

2006,

2010. On March 25, 2011, you decide

that you must withdraw are figured by

c. $4,000 ($4,500 if age 50 or older

to recharacterize the rollover. The value

your IRA trustee or custodian. If you

at the end of the year) for 2005,

-4-

Instructions for Form 8606 (2010)

Instructions For Form 8606 - Nondeductible Iras - 2010 Page 4

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