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because the distribution occurred in

recharacterization occurred in 2011,

any related earnings on the amended

2011. You do not report the distribution

report the amount transferred only in

return and include an explanation of the

the attached statement, and not on

withdrawal. Make any other necessary

on your 2011 Form 1040 because the

recharacterization related to 2010 and

your 2010 or 2011 tax return (a 2011

changes on the amended return (for

Form 1099-R should be sent to you by

example, if you reported the

was explained in an attachment to your

January 31, 2012, stating that you

contributions as excess contributions

2010 return.

made a recharacterization of an amount

on your original return, include an

3. You made a contribution to a

in the prior year).

Deleted "You do not report...on Form

amended Form 5329 reflecting that the

Roth IRA and later recharacterized part

8606"

Example. You are single and you

withdrawn contributions are no longer

or all of it to a traditional IRA. Report

treated as having been contributed).

the nondeductible traditional IRA

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

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

plan to a new Roth IRA on July 20,

In most cases, the related earnings

you did not recharacterize the entire

2010. On March 25, 2011, you decide

that you must withdraw are figured by

Deleted ref to

contribution, do not report the

to recharacterize the rollover. The value

your IRA trustee or custodian. If you

MAGI limit

remaining Roth IRA portion of the

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

need to figure the related earnings on

contribution on Form 8606. Attach a

You recharacterize the rollover by

IRA contributions that were returned to

statement to your return explaining the

transferring that entire amount to a

you, see Contributions Returned Before

traditional IRA in a trustee-to-trustee

recharacterization. If the

Due Date of Return in Pub. 590. If you

recharacterization occurred in 2010,

transfer. You report $50,000 on Form

made a contribution or distribution while

1040, line 16a. You do not include the

include the amount transferred from the

the IRA held the returned contribution,

Roth IRA on Form 1040, line 15a; Form

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

see Pub. 590.

occur in 2010 (you also do not report

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

If you made a contribution for 2009

that amount on your 2011 return

16a. If the recharacterization occurred

and you had it returned to you in 2010

because it does not apply to the 2011

in 2011, report the amount transferred

as described above, do not report the

tax year). You are not required to file

only in the attached statement, and not

distribution on your 2010 tax return.

Form 8606, but you must attach a

on your 2010 or 2011 tax return.

Instead, report it on your 2009 original

statement to Form 1040 explaining that

Example. You are single, covered

or amended return in the manner

(a) you made a rollover of $50,000 from

by a retirement plan, and you

described above.

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

contributed $4,000 to a new Roth IRA

Example. On May 28, 2010, you

2010, and (b) you recharacterized the

on June 16, 2010. On December 29,

contributed $4,000 to your traditional

entire amount, which was then valued

2010, you determine that your 2010

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

at $49,000, to a traditional IRA on

modified AGI will allow a full traditional

prior to the contribution. On December

March 25, 2011.

IRA deduction. You decide to

29, 2010, when you are age 57 and the

recharacterize the Roth IRA

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

Return of IRA

contribution as a traditional IRA

you cannot make the entire contribution

contribution and have $4,200, the

because your taxable compensation for

Contributions

balance in the Roth IRA account

the year will be only $3,000. You

($4,000 contribution plus $200 related

decide to have $1,000 of the

If, in 2010 or 2011, you made traditional

earnings), transferred from your Roth

contribution returned to you and

IRA contributions or Roth IRA

IRA to a traditional IRA in a

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

contributions for 2010 and you had

trustee-to-trustee transfer. You deduct

contribution plus $73 earnings). You did

those contributions returned to you with

the $4,000 traditional IRA contribution

not make any other withdrawals or

any related earnings (or minus any

on Form 1040. You are not required to

contributions. You are not required to

loss) by the due date (including

file Form 8606, but you must attach a

file Form 8606. You deduct the $3,000

extensions) of your 2010 tax return, the

statement to your return explaining the

remaining contribution on Form 1040.

returned contributions are treated as if

recharacterization. The statement

You include $1,073 on Form 1040, line

they were never contributed. Do not

indicates that you contributed $4,000 to

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

report the contribution or distribution on

a new Roth IRA on June 16, 2010;

statement to your tax return explaining

Form 8606 or take a deduction for the

recharacterized that contribution on

the distribution. Because you properly

contribution. However, you must report

December 29, 2010, by transferring

removed the excess contribution with

a distribution that was contributed in

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

the related earnings by the due date of

2010 and any related earnings on your

a traditional IRA in a trustee-to-trustee

your tax return, you are not subject to

2010 Form 1040, lines 15a and 15b;

transfer; and that $4,000 of the

the additional 6% tax on excess

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

traditional IRA contribution is deducted

contributions, reported on Form 5329.

Form 1040NR, lines 16a and 16b.

on Form 1040. You include the $4,200

However, because you were under age

Attach a statement explaining the

distribution on your 2010 Form 1040,

at the time of the distribution, the

distribution. You cannot deduct any loss

line 15a.

$73 of earnings is subject to the

that occurred (see Pub. 590 for an

4. You rolled over an amount from a

additional 10% tax on early

exception if you withdrew the entire

qualified retirement plan to a Roth IRA

distributions. You include $7.30 on

amount in all your traditional or Roth

in 2010 and later recharacterized all or

Form 1040, line 58.

IRAs). Also, if you were under age 59

part of the amount to a traditional IRA.

at the time of a distribution with related

Return of Excess

If you only recharacterized part of the

earnings, you generally are subject to

amount rolled over, report the amount

Traditional IRA

the additional 10% tax on early

not recharacterized on Form 8606. If

distributions (see Form 5329, Additional

Contributions

you recharacterized the entire amount,

Taxes on Qualified Plans (Including

do not report the recharacterization on

IRAs) and Other Tax-Favored

The return (distribution) in 2010 of

Form 8606. In either case, attach a

Accounts).

excess traditional IRA contributions for

statement to your return explaining the

years prior to 2010 is not taxable if all

recharacterization and include the

If you timely filed your 2010 tax

three of the following apply.

amount of the original rollover on Form

return without withdrawing a

1040, line 16a; Form 1040A, line 12a;

contribution that you made in 2010, you

1. The distribution was made after

or Form 1040NR, line 17a. If the

can still have the contribution returned

the due date, including extensions, of

recharacterization occurred in 2010,

to you within 6 months of the due date

your tax return for the year for which

also include the amount transferred

of your 2010 tax return, excluding

the contribution was made (if the

from the Roth IRA on Form 1040, line

extensions. If you do, file an amended

distribution was made earlier, see

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

return with “Filed pursuant to section

Return of IRA Contributions on this

1040NR, line 16a. If the

301.9100-2” written at the top. Report

page).

-4-

Instructions for Form 8606 (2010)

Description Of Major Changes And Instructions For Form 8606 - Nondeductible Iras - 2010 Page 6

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