Instructions For Form 8606 - Nondeductible Iras

recharacterized only part of the

on June 16, 2008. On December 29,

made a rollover of $50,000 from a

contribution, report the nondeductible

2008, you determine that your 2008

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

traditional IRA portion of the remaining

modified AGI will allow a full traditional

2008, and (b) you recharacterized the

contribution, if any, on Form 8606, Part

IRA deduction. You decide to

entire amount, which was then valued

I. If you recharacterized the entire

at $49,000, to a traditional IRA on

recharacterize the Roth IRA

contribution, do not report the

March 25, 2009.

contribution as a traditional IRA

contribution on Form 8606. In either

contribution and have $4,200, the

case, attach a statement to your return

balance in the Roth IRA account

Return of IRA

explaining the recharacterization. If the

($4,000 contribution plus $200 related

recharacterization occurred in 2008,

Contributions

earnings), transferred from your Roth

include the amount transferred from the

IRA to a traditional IRA in a

If, in 2008 or 2009, you made traditional

traditional IRA on Form 1040, line 15a;

trustee-to-trustee transfer. You deduct

IRA contributions or Roth IRA

Form 1040A, line 11a; or Form

the $4,000 traditional IRA contribution

contributions for 2008 and you had

1040NR, line 16a. If the

on Form 1040. You are not required to

those contributions returned to you with

recharacterization occurred in 2009,

file Form 8606, but you must attach a

any related earnings (or minus any

report the amount transferred only in

statement to your return explaining the

loss) by the due date (including

the attached statement.

recharacterization. The statement

extensions) of your 2008 tax return, the

indicates that you contributed $4,000 to

Example. You are single, covered

returned contributions are treated as if

a new Roth IRA on June 16, 2008;

by a retirement plan, and you

they were never contributed. Do not

recharacterized that contribution on

contributed $4,000 to a new traditional

report the contribution or distribution on

December 29, 2008, by transferring

IRA on May 27, 2008. On February 24,

Form 8606 or take a deduction for the

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

2009, you determine that your 2008

contribution. However, you must report

modified AGI will limit your traditional

a traditional IRA in a trustee-to-trustee

the distribution and any related

IRA deduction to $1,000. The value of

transfer; and that $4,000 of the

earnings on your 2008 Form 1040,

your traditional IRA on that date is

traditional IRA contribution is deducted

lines 15a and 15b; Form 1040A, lines

$4,400. You decide to recharacterize

on Form 1040. You include the $4,200

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

$3,000 of the traditional IRA

distribution on your 2008 Form 1040,

16a and 16b. Attach a statement

contribution as a Roth IRA contribution,

line 15a.

explaining the distribution. You cannot

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

4. You rolled over an amount from a

deduct any loss that occurred (see Pub.

plus $300 related earnings) transferred

qualified retirement plan to a Roth IRA

590 for an exception if you withdrew the

from your traditional IRA to a Roth IRA

in 2008 and later recharacterized all or

entire amount in all your traditional or

in a trustee-to-trustee transfer. You

part of the amount to a traditional IRA.

Roth IRAs). Also, if you were under age

deduct the $1,000 traditional IRA

Attach a statement to your return

at the time of a distribution with

contribution on Form 1040. You are not

explaining the recharacterization and

related earnings, you generally are

required to file Form 8606, but you

include the amount of the original

subject to the additional 10% tax on

must attach a statement to your return

rollover on Form 1040, line 16a; Form

early distributions (see Form 5329,

explaining the recharacterization. The

1040A, line 12a; or Form 1040NR, line

Additional Taxes on Qualified Plans

statement indicates that you contributed

17a. Also, include any taxable amount

(Including IRAs) and Other

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

of the rollover not recharacterized on

Tax-Favored Accounts).

2008; recharacterized $3,000 of that

Form 1040, line 16b; Form 1040A, line

If you timely filed your 2008 tax

contribution on February 24, 2009, by

12b; or Form 1040NR, line 17b. If the

return without withdrawing a

transferring $3,000 plus $300 of related

recharacterization occurred in 2008,

contribution that you made in 2008, you

earnings from your traditional IRA to a

also include the amount transferred

can still have the contribution returned

Roth IRA in a trustee-to-trustee

from the Roth IRA on Form 1040, line

to you within 6 months of the due date

transfer; and that all $1,000 of the

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

of your 2008 tax return, excluding

remaining traditional IRA contribution is

1040NR, line 16a. If the

extensions. If you do, file an amended

deducted on Form 1040. You do not

recharacterization occurred in 2009,

return with “Filed pursuant to section

report the $3,300 distribution from your

report the amount transferred only in

301.9100-2” written at the top. Report

traditional IRA on your 2008 Form 1040

the attached statement, and not on

any related earnings on the amended

because the distribution occurred in

your 2008 or 2009 tax return (a 2009

return and include an explanation of the

2009. You do not report the distribution

Form 1099-R should be sent to you by

withdrawal. Make any other necessary

on your 2009 Form 1040 because the

February 1, 2010, stating that you

changes on the amended return (for

recharacterization related to 2008 and

made a recharacterization of an amount

example, if you reported the

was explained in an attachment to your

in the prior year). You do not report

contributions as excess contributions

2008 return.

these rollovers or recharacterizations

on your original return, include an

on Form 8606.

3. You made a contribution to a

amended Form 5329 reflecting that the

Roth IRA and later recharacterized part

Example. You are single and you

withdrawn contributions are no longer

or all of it to a traditional IRA. Report

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

treated as having been contributed).

the nondeductible traditional IRA

plan to a new Roth IRA on July 20,

In most cases, the related earnings

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

2008. On March 25, 2009, you

that you must withdraw are figured by

you did not recharacterize the entire

determine that your 2008 modified AGI

your IRA trustee or custodian. If you

contribution, do not report the

for Roth IRA purposes will exceed

need to figure the related earnings on

remaining Roth IRA portion of the

$100,000, and you are not allowed to

IRA contributions that were returned to

contribution on Form 8606. Attach a

make a Roth IRA rollover. The value of

you, see Contributions Returned Before

statement to your return explaining the

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

Due Date of Return in Pub. 590. If you

recharacterization. If the

You recharacterize the rollover by

made a contribution or distribution while

recharacterization occurred in 2008,

transferring that entire amount to a

the IRA held the returned contribution,

include the amount transferred from the

traditional IRA in a trustee-to-trustee

see Pub. 590.

Roth IRA on Form 1040, line 15a; Form

transfer. You report $50,000 on Form

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

1040, line 16a. You do not include the

If you made a contribution for 2007

16a. If the recharacterization occurred

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

and you had it returned to you in 2008

in 2009, report the amount transferred

occur in 2008 (you also do not report

as described above, do not report the

only in the attached statement, and not

that amount on your 2009 return

distribution on your 2008 tax return.

on your 2008 or 2009 tax return.

because it does not apply to the 2009

Instead, report it on your 2007 original

Example. You are single and

tax year). You attach a statement to

or amended return in the manner

contributed $4,000 to a new Roth IRA

Form 1040 explaining that (a) you

described above.

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Instructions For Form 8606 - Nondeductible Iras - 2008 Page 4

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