Instructions For Form 8606 - Nondeductible Iras

of Form 8606 your nondeductible

line 1 over the contributions you

traditional IRA that may not be fully

contributions.

actually made in 2003.

deductible because of the income

limits, you must make a special

Example. You made contributions

Do not include on line 1

computation before completing the

for 2003 of $1,500 in May 2003 and

contributions that you had returned to

rest of this form. For details, including

$1,500 in January 2004, of which

you with the related earnings (or less

how to complete Form 8606, see Are

$2,000 are deductible and $1,000 are

any loss). See page 4.

Distributions Taxable? in Chapter 1

nondeductible. You choose $1,000 of

of Pub. 590.

your contribution in 2003 to be

Line 2

nondeductible. You enter the $1,000

Do not include any of the following

If this is the first year you are required

on line 1, but not line 4, and it

on line 7.

to file Form 8606, enter zero.

•

becomes part of your basis for 2003.

Distributions that you converted to

Otherwise, use the chart below to find

a Roth IRA.

Although the contributions to

the amount to enter on line 2.

•

traditional IRAs for 2003 that you

Recharacterizations.

•

However, you may need to adjust

made from January 1, 2004, through

Distributions that you rolled over by

or include an amount on this line if

April 15, 2004, can be treated as

December 31, 2003, and any

your basis changed since you last

nondeductible, they are not included

outstanding rollovers included on

filed Form 8606 because of any of the

line 6.

in figuring the nontaxable part of any

•

following.

Distributions you rolled over to a

distributions you received in 2003.

•

You had a return of excess

qualified employer plan.

Line 6

•

traditional IRA contributions (see

Distributions that are treated as a

page 4).

Enter the total value of all your

return of contributions under Return

•

Incident to divorce, you transferred

traditional, SEP, and SIMPLE IRAs

of IRA Contributions on page 4.

•

or received part or all of a traditional

as of December 31, 2003, plus any

Distributions that are treated as a

outstanding rollovers. A statement

IRA (see Distributions incident to

return of excess contributions under

should be sent to you by February 2,

divorce on this page).

Return of Excess Traditional IRA

•

2004, showing the value of each IRA

You rolled over any nontaxable

Contributions on page 5.

•

on December 31, 2003. However, if

portion of your qualified employer

Distributions of excess

you recharacterized any amounts,

plan to a traditional or SEP IRA.

contributions due to incorrect rollover

enter on line 6 the total value taking

Include the nontaxable portion on

information. If an excess contribution

into account all recharacterizations,

line 2.

in your traditional IRA is the result of

including recharacterizations made

a rollover from a qualified retirement

after December 31, 2003.

IF the last Form

THEN enter on

plan and the excess occurred

8606 you filed

line 2...

because the information the plan was

For line 6, a rollover is a tax-free

was for...

required to give you was incorrect,

distribution from one traditional, SEP,

the distribution of the excess

or SIMPLE IRA that is contributed to

2002 or 2001

The amount from

contribution is not taxable. Attach a

another traditional, SEP, or SIMPLE

line 14 of that

statement to your return explaining

IRA. The rollover must be completed

Form 8606

the distribution and include the

within 60 days of receiving the

A year after 1992

The amount from

amount of the distribution on Form

distribution from the first IRA. An

and before 2001

line 12 of that

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

outstanding rollover is any amount

Form 8606

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

distributed within 60 days before the

590 for more details.

A year after 1988

The amount from

end of 2003 (from November 2

•

Distributions incident to divorce.

and before 1993

line 14 of that

through December 31) that was rolled

The transfer of part or all of your

Form 8606

over after December 31, 2003, but

traditional, SEP, or SIMPLE IRA to

within the 60-day rollover period.

1988

The total of the

your spouse under a divorce or

The IRS may waive the 60-day

amounts on lines 7

separation agreement is not taxable

requirement if failing to waive it would

and 16 of that

to you or your spouse. If this transfer

be against equity or good conscience,

Form 8606

results in a change in the basis of the

such as situations where a casualty,

traditional IRA of either spouse, both

1987

The total of the

disaster, or other events beyond your

spouses must file Form 8606 and

amounts on lines 4

reasonable control prevented you

and 13 of that

show the increase or decrease in the

from meeting the 60-day requirement.

Form 8606

amount of basis on line 2. Attach a

Also, the 60-day period may be

statement explaining this adjustment.

extended if you had a frozen deposit.

Include in the statement the character

See Pub. 590 for details.

Line 4

of the amounts in the traditional IRA,

Note: Do not include a rollover from a

such as the amount attributable to

If you made contributions to

traditional or SEP IRA to a qualified

nondeductible contributions. Also,

traditional IRAs for 2003 in 2003 and

employer plan even if it was an

include the name and social security

2004 and you have both deductible

outstanding rollover.

number of the other spouse.

and nondeductible contributions, you

Line 7

may choose to treat the contributions

Line 8

made in 2003 first as nondeductible

contributions and then as deductible

If you received a distribution in

If, in 2003, you converted any

contributions, or vice versa. But the

2003 from a traditional, SEP,

amounts from traditional, SEP, or

amount on line 4 cannot be less than

or SIMPLE IRA and you also

SIMPLE IRAs to a Roth IRA, enter on

CAUTION

the excess, if any, of the amount on

made contributions for 2003 to a

line 8 the net amount you converted.

-6-

Instructions For Form 8606 - Nondeductible Iras - 2003 Page 6

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