Instructions For Form 8606 - Nondeductible Iras

only in the attached statement, and not

that amount on your 2010 return

as described above, do not report the

on your 2009 or 2010 tax return.

because it does not apply to the 2010

distribution on your 2009 tax return.

tax year). You attach a statement to

Instead, report it on your 2008 original

Example. You are single and

Form 1040 explaining that (a) you

or amended return in the manner

contributed $4,000 to a new Roth IRA

made a rollover of $50,000 from a

described above.

on June 16, 2009. On December 29,

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

2009, you determine that your 2009

Example. On May 28, 2009, you

2009, and (b) you recharacterized the

modified AGI will allow a full traditional

contributed $4,000 to your traditional

entire amount, which was then valued

IRA deduction. You decide to

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

at $49,000, to a traditional IRA on

recharacterize the Roth IRA

prior to the contribution. On December

March 25, 2010.

contribution as a traditional IRA

29, 2009, when you are age 57 and the

contribution and have $4,200, the

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

balance in the Roth IRA account

Return of IRA

you cannot make the entire contribution

($4,000 contribution plus $200 related

because your taxable compensation for

Contributions

earnings), transferred from your Roth

the year will be only $3,000. You

IRA to a traditional IRA in a

decide to have $1,000 of the

If, in 2009 or 2010, you made traditional

trustee-to-trustee transfer. You deduct

contribution returned to you and

IRA contributions or Roth IRA

the $4,000 traditional IRA contribution

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

contributions for 2009 and you had

on Form 1040. You are not required to

contribution plus $73 earnings). You did

those contributions returned to you with

file Form 8606, but you must attach a

not make any other withdrawals or

any related earnings (or minus any

statement to your return explaining the

contributions. You are not required to

loss) by the due date (including

recharacterization. The statement

file Form 8606. You deduct the $3,000

extensions) of your 2009 tax return, the

indicates that you contributed $4,000 to

remaining contribution on Form 1040.

returned contributions are treated as if

a new Roth IRA on June 16, 2009;

You include $1,073 on Form 1040, line

they were never contributed. Do not

recharacterized that contribution on

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

report the contribution or distribution on

December 29, 2009, by transferring

statement to your tax return explaining

Form 8606 or take a deduction for the

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

the distribution. Because you properly

contribution. However, you must report

a traditional IRA in a trustee-to-trustee

removed the excess contribution with

a distribution that was contributed in

transfer; and that $4,000 of the

the related earnings by the due date of

2009 and any related earnings on your

traditional IRA contribution is deducted

your tax return, you are not subject to

2009 Form 1040, lines 15a and 15b;

on Form 1040. You include the $4,200

the additional 6% tax on excess

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

distribution on your 2009 Form 1040,

contributions. However, because you

Form 1040NR, lines 16a and 16b.

line 15a.

were under age 59

at the time of the

Attach a statement explaining the

distribution, the $73 of earnings is

4. You rolled over an amount from a

distribution. You cannot deduct any loss

subject to the additional 10% tax on

qualified retirement plan to a Roth IRA

that occurred (see Pub. 590 for an

early distributions. You include $7.30

in 2009 and later recharacterized all or

exception if you withdrew the entire

on Form 1040, line 58.

part of the amount to a traditional IRA.

amount in all your traditional or Roth

Attach a statement to your return

IRAs). Also, if you were under age 59

Return of Excess

explaining the recharacterization and

at the time of a distribution with related

include the amount of the original

earnings, you generally are subject to

Traditional IRA

rollover on Form 1040, line 16a; Form

the additional 10% tax on early

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

distributions (see Form 5329, Additional

Contributions

17a. Also, include any taxable amount

Taxes on Qualified Plans (Including

The return (distribution) in 2009 of

of the rollover not recharacterized on

IRAs) and Other Tax-Favored

excess traditional IRA contributions for

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

Accounts).

years prior to 2009 is not taxable if all

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

If you timely filed your 2009 tax

three of the following apply.

recharacterization occurred in 2009,

return without withdrawing a

also include the amount transferred

1. The distribution was made after

contribution that you made in 2009, you

from the Roth IRA on Form 1040, line

the due date, including extensions, of

can still have the contribution returned

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

your tax return for the year for which

to you within 6 months of the due date

1040NR, line 16a. If the

the contribution was made (if the

of your 2009 tax return, excluding

recharacterization occurred in 2010,

distribution was made earlier, see

extensions. If you do, file an amended

report the amount transferred only in

Return of IRA Contributions on this

return with “Filed pursuant to section

the attached statement, and not on

page).

301.9100-2” written at the top. Report

your 2009 or 2010 tax return (a 2010

2. The total contributions (excluding

any related earnings on the amended

Form 1099-R should be sent to you by

rollovers and conversions) to your

return and include an explanation of the

February 1, 2011, stating that you

traditional and SEP IRAs for the year

withdrawal. Make any other necessary

made a recharacterization of an amount

for which the excess contribution was

changes on the amended return (for

in the prior year). You do not report

made did not exceed:

example, if you reported the

these rollovers or recharacterizations

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

contributions as excess contributions

on Form 8606.

at the end of the year) for 2008,

on your original return, include an

Example. You are single and you

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

amended Form 5329 reflecting that the

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

at the end of the year) for 2007 or

withdrawn contributions are no longer

plan to a new Roth IRA on July 20,

2006,

treated as having been contributed).

2009. On March 25, 2010, you

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

In most cases, the related earnings

determine that your 2009 modified AGI

at the end of the year) for 2005,

that you must withdraw are figured by

for Roth IRA purposes will exceed

d. $3,000 ($3,500 if age 50 or older

your IRA trustee or custodian. If you

$100,000, and you are not allowed to

at the end of the year) for years after

need to figure the related earnings on

make a Roth IRA rollover. The value of

2001 and before 2005,

IRA contributions that were returned to

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

e. $2,000 for years after 1996 and

you, see Contributions Returned Before

You recharacterize the rollover by

before 2002, or

Due Date of Return in Pub. 590. If you

transferring that entire amount to a

f. $2,250 for years before 1997.

made a contribution or distribution while

traditional IRA in a trustee-to-trustee

If your total IRA contributions for the

the IRA held the returned contribution,

transfer. You report $50,000 on Form

year included employer contributions to

see Pub. 590.

1040, line 16a. You do not include the

a SEP IRA, increase the $5,000

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

If you made a contribution for 2008

($6,000, if applicable), $4,000 ($5,000

occur in 2009 (you also do not report

and you had it returned to you in 2009

or $4,500, if applicable), $3,000

-4-

Instructions for Form 8606 (2009)

Instructions For Form 8606 - Nondeductible Iras - 2009 Page 4

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