Instructions For Form 8606 - Nondeductible Iras

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Department of the Treasury

Internal Revenue Service

Instructions for Form 8606

Nondeductible IRAs

Section references are to the Internal Revenue Code unless otherwise noted.

•

You converted an amount from a

Contributions. An overall

General Instructions

traditional, SEP, or SIMPLE IRA to a

contribution limit applies to traditional

Roth IRA in 2003 (unless you

IRAs and Roth IRAs. See page 2.

A Change To Note

recharacterized the entire

Contributions to a traditional IRA may

conversion — see page 3).

be fully deductible, partially

A Roth IRA distribution used for the

•

You received distributions from a

deductible, or completely

purchase of a first home may not be

Roth IRA in 2003 (other than a

nondeductible.

taxable. See the instructions for Line

rollover, recharacterization, or return

23 on page 8.

Basis. Your basis in traditional IRAs

of certain contributions — see

is the total of all your nondeductible

page 7).

Purpose of Form

contributions to traditional IRAs minus

Note: If you recharacterized a 2003

the total of all your nontaxable

Use Form 8606 to report:

Roth IRA contribution as a traditional

•

distributions, adjusted if necessary

Nondeductible contributions you

IRA contribution, or vice versa, treat

(see the instructions for line 2 on

made to traditional IRAs,

the contribution as having been made

•

page 6). Keep track of your basis to

Distributions from traditional, SEP,

to the second IRA, not the first IRA.

figure the nontaxable part of your

or SIMPLE IRAs, if you have ever

See page 3.

future distributions.

made nondeductible contributions to

traditional IRAs,

You do not have to file Form

SEP IRAs

•

TIP

8606 solely to report regular

Distributions from Roth IRAs, and

A simplified employee pension (SEP)

•

contributions to Roth IRAs.

Conversions from traditional, SEP,

is an employer-sponsored plan under

But see What Records Must I

or SIMPLE IRAs to Roth IRAs.

which an employer can make

Keep? on page 5.

contributions to traditional IRAs for its

Additional information. See Pub.

employees. If you make contributions

590, Individual Retirement

When and Where To File

to that IRA (excluding employer

Arrangement (IRAs), for more details.

File Form 8606 with your 2003 Form

contributions you make if you are

If you received distributions

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

self-employed), they are treated as

TIP

from a traditional, SEP, or

not required to file an income tax

contributions to a traditional IRA, and

SIMPLE IRA in 2003 and you

return but are required to file Form

may be deductible or nondeductible.

have never made nondeductible

8606, sign Form 8606 and send it to

SEP IRA distributions are reported in

the same manner as traditional IRA

contributions to traditional IRAs, do

the Internal Revenue Service at the

distributions.

not report the distributions on Form

same time and place you would

8606. Instead, see the instructions for

otherwise file Form 1040, 1040A, or

SIMPLE IRAs

Form 1040, lines 15a and 15b; Form

1040NR.

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

Your participation in your employer’s

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

Definitions

SIMPLE IRA plan does not prevent

find out if any of your contributions to

you from making contributions to a

traditional IRAs are deductible, see

traditional, SEP, or Roth IRA.

Deemed IRAs

the instructions for Form 1040, line

Beginning in 2003, a qualified

Roth IRAs

24; Form 1040A, line 17; or Form

employer plan (retirement plan) could

1040NR, line 25.

A Roth IRA is similar to a traditional

maintain a separate account or

IRA, but has the following features.

annuity under the plan (a deemed

•

Contributions are never deductible.

Who Must File

IRA) to receive voluntary employee

•

Contributions can be made after

File Form 8606 if any of the following

contributions. If in 2003 you had a

the owner reaches age 70

apply.

deemed IRA, use the rules for either

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No minimum distributions are

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a traditional IRA or a Roth IRA

You made nondeductible

required during the Roth IRA owner’s

depending on which type it was. See

contributions to a traditional IRA for

lifetime.

Pub. 590 for more details.

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2003.

Qualified distributions are not

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You received distributions from a

includible in income.

Traditional IRAs

traditional, SEP, or SIMPLE IRA in

Qualified distribution. Generally, a

2003 (other than a rollover,

For purposes of Form 8606, a

qualified distribution is any

conversion, recharacterization, or

traditional IRA is an individual

distribution made:

return of certain contributions) and

retirement account or an individual

•

your basis in traditional IRAs is more

retirement annuity other than a SEP,

On or after age 59

•

than zero.

SIMPLE, or Roth IRA.

Upon death,

Cat. No. 25399E

Instructions For Form 8606 - Nondeductible Iras - 2003

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