Comments on: Traditional IRA Basis

By: Eileen Miner

Eileen Miner — Tue, 22 Feb 2011 21:28:09 +0000

Errors were made over the years and my true basis for nondedductible IRA is approximately $20K more than reported on last form 8606. My records go back to 1991. How do I correct the nondeductible basis and is it worth the hassle?

By: anastasia aourik

anastasia aourik — Wed, 17 Jun 2009 18:23:58 +0000

Line 2 of form 8606 is more important than you think as it will track the SUM TOTAL of all non-deductible IRA contributions you have made since you started paying taxes. Remember, your ira is non-deductible in years where your income exceeds that year’s deductibility limit. You must therefore keep 1040 forms for every year you have ever paid taxes, you must keep all your 5468 forms that ira custodian sends you showing how much ira contrib you made (will not show whether it’s non-deductible as this is not custodian’s responsibility), and you must keep all your forms 8606.
Line 2 grows every year to LET IRS know the sum total of your non-deductible IRA contribs. It will be important when you turn 70 1/2 and are required to make distributions and pay taxes. You will calc RMD as normal but pay taxes on a prorated amount of RMD based on ratio of basis/total ira amount.

By: Michael

Michael — Tue, 14 Apr 2009 02:27:21 +0000

Wow. Now I’m supposed to fish back through tax records since 1992 to see if I ever filed a form 8606. I regret ever contributing anything to any IRA. What a debacle.

By: Elizabeth Hinson

Elizabeth Hinson — Tue, 31 Mar 2009 15:28:01 +0000

I filed an 8606 each year I contributed to an IRA. But I am now retired and can no longer contribute to an IRA. Do I still have to file an 8606 for the IRA’s that are not touched now, or just hang onto my old form to use when I do tap the IRA?