Instructions For Form 8606 - Nondeductible Iras

rollovers from qualified retirement plans

qualified retirement plans, and

earnings that you must transfer are

only).

repayments of qualified hurricane,

figured by your IRA trustee or

2. Adding the following.

disaster recovery assistance, recovery

custodian. If you need to figure the

assistance, and reservist distributions

related earnings, see How Do You

a. IRA deduction from Form 1040,

do not affect your contribution limit.

Recharacterize a Contribution in Pub.

line 32; Form 1040A, line 17; or Form

590. Any earnings or loss that occurred

1040NR, line 31.

The amount you can contribute

in the first IRA will be treated as having

b. Student loan interest deduction

to a Roth IRA may also be

occurred in the second IRA. You

from Form 1040, line 33; Form 1040A,

limited by your modified AGI

CAUTION

cannot deduct any loss that occurred

line 18; or Form 1040NR, line 32.

(see Contributions and the Maximum

while the funds were in the first IRA.

c. Tuition and fees deduction from

Roth IRA Contribution Worksheet on

Also, you cannot take a deduction for a

Form 1040, line 34; or Form 1040A,

page 2).

contribution to a traditional IRA if the

line 19.

Taxable compensation includes the

amount is later recharacterized. See

d. Domestic production activities

following.

below for how to report the four

deduction from Form 1040, line 35; or

•

Wages, salaries, tips, etc. If you

different types of recharacterizations,

Form 1040NR, line 33.

received a distribution from a

including the statement that must be

e. Exclusion of interest from Form

nonqualified deferred compensation

attached to your return explaining the

8815, Exclusion of Interest From Series

plan or nongovernmental section 457

recharacterization.

EE and I U.S. Savings Bonds Issued

plan that is included in Form W-2, box

After 1989.

1. You converted an amount from a

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

f. Exclusion of employer-provided

traditional, SEP, or SIMPLE IRA to a

include that distribution in taxable

adoption benefits from Form 8839,

Roth IRA in 2008 and later

compensation. The distribution should

Qualified Adoption Expenses.

recharacterized all or part of the

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

g. Foreign earned income exclusion

amount back to a traditional, SEP, or

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

from Form 2555, Foreign Earned

SIMPLE IRA. If you only

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

Income, or Form 2555-EZ, Foreign

recharacterized part of the amount

contact your employer for the amount

Earned Income Exclusion.

converted, report the amount not

of the distribution.

h. Foreign housing exclusion or

recharacterized on Form 8606. If you

•

Nontaxable combat pay if you were a

deduction from Form 2555.

recharacterized the entire amount, do

member of the U.S. Armed Forces.

not report the recharacterization on

•

Self-employment income. If you are

When figuring modified AGI for

Form 8606. In either case, attach a

self-employed (a sole proprietor or a

Roth IRA purposes, you may

statement to your return explaining the

partner), taxable compensation is your

have to refigure items based on

recharacterization and include the

CAUTION

net earnings from your trade or

modified AGI, such as taxable social

amount converted from the traditional,

business (provided your personal

security benefits and passive activity

SEP, or SIMPLE IRA in the total on

services are a material

losses allowed under the special

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

income-producing factor) reduced by

allowance for rental real estate

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

your deduction for contributions made

activities. See Can You Contribute to a

recharacterization occurred in 2008,

on your behalf to retirement plans and

Roth IRA? in Pub. 590 for details.

also include the amount transferred

the deduction allowed for one-half of

back from the Roth IRA on that line. If

Distributions. See the instructions for

your self-employment tax.

the recharacterization occurred in 2009,

•

Part III that begin on page 7.

Alimony and separate maintenance.

report the amount transferred only in

See Pub. 590 for details.

Overall Contribution Limit for

the attached statement, and not on

your 2008 or 2009 tax return (a 2009

Traditional and Roth IRAs

Recharacterizations

Form 1099-R should be sent to you by

If you are not married filing jointly, your

February 1, 2010, stating that you

Generally, you can recharacterize

limit on contributions to traditional and

made a recharacterization of an amount

(correct) an IRA contribution, Roth IRA

Roth IRAs is the smaller of $5,000

converted in the prior year).

conversion, or a Roth IRA rollover from

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

a qualified retirement plan by making a

Example. You are married filing

2008) or your taxable compensation

trustee-to-trustee transfer from one IRA

jointly and converted $20,000 from your

(defined later). If you are married filing

to another type of IRA.

traditional IRA to a new Roth IRA on

jointly, your contribution limit is

Trustee-to-trustee transfers are made

May 20, 2008. On April 7, 2009, you

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

directly between financial institutions or

determine that your 2008 modified AGI

older at the end of 2008) and your

within the same financial institution.

for Roth IRA purposes will exceed

spouse’s contribution limit is $5,000

You generally must make the transfer

$100,000, and you are not allowed to

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

by the due date of your return

make a Roth IRA conversion. The value

2008) as well. But if the combined

(including extensions) and reflect it on

of the Roth IRA on that date is $19,000.

taxable compensation of both you and

your return. However, if you timely filed

You recharacterize the conversion by

your spouse is less than $10,000

your return without making the transfer,

transferring that entire amount to a

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

you can make the transfer within 6

traditional IRA in a trustee-to-trustee

the end of 2008; $12,000 if both

months of the due date of your return,

transfer. You report $20,000 on Form

spouses are 50 or older at the end of

excluding extensions. If necessary, file

1040, line 15a. You do not include the

2008), see Pub. 590 for special rules.

an amended return reflecting the

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

This limit does not apply to employer

transfer (see page 5). Write “Filed

occur in 2008 (you also do not report

contributions to a SEP or SIMPLE IRA.

pursuant to section 301.9100-2” on the

that amount on your 2009 return

Catch-up contributions in certain

amended return.

because it does not apply to the 2009

employer bankruptcies. If you

tax year). You attach a statement to

Reporting recharacterizations. Any

participated in a 401(k) plan and the

Form 1040 explaining that (a) you

recharacterized conversion or Roth IRA

employer who maintained the plan went

made a conversion of $20,000 from a

rollover from a qualified retirement plan

into bankruptcy in an earlier year, you

traditional IRA on May 20, 2008, and

will be treated as though the conversion

may be able to contribute an additional

(b) you recharacterized the entire

or rollover had not occurred. Any

$3,000 to your IRA. For more

amount, which was then valued at

recharacterized contribution will be

information, see Catch-up contributions

$19,000, back to a traditional IRA on

treated as having been originally

in certain employer bankruptcies in

April 7, 2009.

contributed to the second IRA, not the

Pub. 590.

first IRA. The amount transferred must

2. You made a contribution to a

Note. Rollovers, Roth IRA

include related earnings or be reduced

traditional IRA and later recharacterized

conversions, Roth IRA rollovers from

by any loss. In most cases, the related

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

-3-

Instructions For Form 8606 - Nondeductible Iras - 2008 Page 3

Related Articles

Related forms

Related Categories