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Distributions. See the instructions for

Example. You are married filing

a qualified retirement plan by making a

Part IV on page 7.

trustee-to-trustee transfer from one IRA

jointly and converted $20,000 from your

to another type of IRA.

traditional IRA to a new Roth IRA on

Overall Contribution Limit for

Trustee-to-trustee transfers are made

May 20, 2010. On April 7, 2011, you

Traditional and Roth IRAs

directly between financial institutions or

decide to recharacterize the

within the same financial institution.

conversion. The value of the Roth IRA

If you are not married filing jointly, your

You generally must make the transfer

on that date is $19,000. You

limit on contributions to traditional and

by the due date of your return

recharacterize the conversion by

Roth IRAs is the smaller of $5,000

(including extensions) and reflect it on

transferring that entire amount to a

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

your return. However, if you timely filed

traditional IRA in a trustee-to-trustee

2010) or your taxable compensation

your return without making the transfer,

transfer. You report $20,000 on Form

(defined below). If you are married filing

you can make the transfer within 6

1040, line 15a. You do not include the

jointly, your contribution limit is

months of the due date of your return,

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

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

excluding extensions. If necessary, file

occur in 2010 (you also do not report

older at the end of 2010) and your

an amended return reflecting the

that amount on your 2011 return

spouse’s contribution limit is $5,000

transfer (see page 5). Write “Filed

because it does not apply to the 2011

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

pursuant to section 301.9100-2” on the

tax year). You attach a statement to

2010) as well. But if the combined

amended return.

Form 1040 explaining that (a) you

taxable compensation of both you and

made a conversion of $20,000 from a

Reporting recharacterizations. Any

your spouse is less than $10,000

traditional IRA on May 20, 2010, and

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

recharacterized conversion or Roth IRA

(b) you recharacterized the entire

the end of 2010; $12,000 if both

rollover from a qualified retirement plan

amount, which was then valued at

spouses are 50 or older at the end of

will be treated as though the conversion

$19,000, back to a traditional IRA on

2010), see Pub. 590 for special rules.

or rollover had not occurred. Any

April 7, 2011.

This limit does not apply to employer

Deleted info

recharacterized contribution will be

on Add'l

2. You made a contribution to a

contributions to a SEP or SIMPLE IRA.

treated as having been originally

contribs for

traditional IRA and later recharacterized

Note. Rollovers, Roth IRA

contributed to the second IRA, not the

certain empl.

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

first IRA. The amount transferred must

bankruptcies

conversions, Roth IRA rollovers from

recharacterized only part of the

include related earnings or be reduced

qualified retirement plans, and

contribution, report the nondeductible

by any loss. In most cases, the related

repayments of qualified disaster

traditional IRA portion of the remaining

earnings that you must transfer are

recovery assistance, qualified recovery

contribution, if any, on Form 8606, Part

figured by your IRA trustee or

assistance, and qualified reservist

I. If you recharacterized the entire

custodian. If you need to figure the

distributions do not affect your

contribution, do not report the

related earnings, see How Do You

contribution limit.

Deleted ref to qual.

contribution on Form 8606. In either

Recharacterize a Contribution? in Pub.

hurricane distribs.

The amount you can contribute

590. Any earnings or loss that occurred

case, attach a statement to your return

explaining the recharacterization. If the

to a Roth IRA may also be

in the first IRA will be treated as having

limited by your modified AGI

occurred in the second IRA. You

recharacterization occurred in 2010,

CAUTION

include the amount transferred from the

(see Contributions and the Maximum

cannot deduct any loss that occurred

Roth IRA Contribution Worksheet on

while the funds were in the first IRA.

traditional IRA on Form 1040, line 15a;

page 2).

Also, you cannot take a deduction for a

Form 1040A, line 11a; or Form

contribution to a traditional IRA if the

1040NR, line 16a. If the

Taxable compensation includes the

recharacterization occurred in 2011,

amount is later recharacterized. The

following.

•

following discussion explains how to

report the amount transferred only in

Wages, salaries, tips, etc. If you

the attached statement.

report the four different types of

received a distribution from a

recharacterizations, including the

Example. You are single, covered

nonqualified deferred compensation

statement that must be attached to your

by a retirement plan, and you

plan or nongovernmental section 457

return explaining the recharacterization.

contributed $4,000 to a new traditional

plan that is included in Form W-2, box

1. You converted an amount from a

IRA on May 27, 2010. On February 24,

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

traditional, SEP, or SIMPLE IRA to a

2011, you determine that your 2010

include that distribution in taxable

Roth IRA in 2010 and later

modified AGI will limit your traditional

compensation. The distribution should

recharacterized all or part of the

IRA deduction to $1,000. The value of

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

amount back to a traditional, SEP, or

your traditional IRA on that date is

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

SIMPLE IRA. If you only

$4,400. You decide to recharacterize

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

$3,000 of the traditional IRA

recharacterized part of the amount

contact your employer for the amount

deleted ref

converted, report the amount not

contribution as a Roth IRA contribution,

of the distribution.

•

differential

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

recharacterized on Form 8606. If you

Nontaxable combat pay if you were a

wage

recharacterized the entire amount, do

plus $300 related earnings) transferred

member of the U.S. Armed Forces.

payments

•

not report the recharacterization on

from your traditional IRA to a Roth IRA

Self-employment income. If you are

Form 8606. In either case, attach a

in a trustee-to-trustee transfer. You

self-employed (a sole proprietor or a

statement to your return explaining the

deduct the $1,000 traditional IRA

partner), taxable compensation is your

recharacterization and include the

contribution on Form 1040. You are not

net earnings from your trade or

amount converted from the traditional,

required to file Form 8606, but you

business (provided your personal

SEP, or SIMPLE IRA in the total on

must attach a statement to your return

services are a material

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

explaining the recharacterization. The

income-producing factor) reduced by

statement indicates that you contributed

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

your deduction for contributions made

recharacterization occurred in 2010,

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

on your behalf to retirement plans and

also include the amount transferred

2010; recharacterized $3,000 of that

the deduction allowed for one-half of

back from the Roth IRA on that line. If

contribution on February 24, 2011, by

your self-employment tax.

•

the recharacterization occurred in 2011,

transferring $3,000 plus $300 of related

Alimony and separate maintenance.

report the amount transferred only in

earnings from your traditional IRA to a

See Pub. 590 for details.

the attached statement, and not on

Roth IRA in a trustee-to-trustee

Recharacterizations

your 2010 or 2011 tax return (a 2011

transfer; and that all $1,000 of the

Form 1099-R should be sent to you by

remaining traditional IRA contribution is

Generally, you can recharacterize

January 31, 2012, stating that you

deducted on Form 1040. You do not

(correct) an IRA contribution, Roth IRA

made a recharacterization of an amount

report the $3,300 distribution from your

traditional IRA on your 2010 Form 1040

conversion, or a Roth IRA rollover from

converted in the prior year).

-3-

Instructions for Form 8606 (2010)

Also, you must add back any self-employed health insurance deduction you used in

figuring the amount to enter on Schedule SE, line 3.

Description Of Major Changes And Instructions For Form 8606 - Nondeductible Iras - 2010 Page 5

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