Hello all,
Last year (2020) I started the beginnings of Roth conversions. Trying to reduce my traditional ira balance before rmds start in 4 years. I have also begun monthly withdrawals from the Ira to burn down the balance. I realize I’m discarding the interest within the retirement account but I think the future rmds will force me to withdraw more dollars than I need. So, in the long run I think I’ll come out ahead in the end.
My question is how to fill out the 8606 form at tax time. My understanding is that only Part 2 of the 8606 needs to be filled out. In year 2020 I converted $20k. On 8606 part 2 line 16 I enter $20k. Line 17 is zero since I had no previous basis. Line 18 is the taxable amount which is $20k and gets reported on 1040-SR line 4b and I pay the tax.
I plan on converting an additional $30k in tax year 2021. When I fill out the new 8606 do I just put $30k on lines 16 and 18 again? I plan on keeping track of the dollar amounts and dates etc . How does the irs know that I converted a total of $50k from the traditional ira and placed into the Roth IRA bucket. Do I have to put some note on the 8686 form that I previously converted $20k from the prior year?
Just want to ensure the irs understands I want to do a series of Roth conversions and if I have to give the irs notice that my Roth totals will be increasing over time due to these conversions
Thanks for any insights.
Last year (2020) I started the beginnings of Roth conversions. Trying to reduce my traditional ira balance before rmds start in 4 years. I have also begun monthly withdrawals from the Ira to burn down the balance. I realize I’m discarding the interest within the retirement account but I think the future rmds will force me to withdraw more dollars than I need. So, in the long run I think I’ll come out ahead in the end.
My question is how to fill out the 8606 form at tax time. My understanding is that only Part 2 of the 8606 needs to be filled out. In year 2020 I converted $20k. On 8606 part 2 line 16 I enter $20k. Line 17 is zero since I had no previous basis. Line 18 is the taxable amount which is $20k and gets reported on 1040-SR line 4b and I pay the tax.
I plan on converting an additional $30k in tax year 2021. When I fill out the new 8606 do I just put $30k on lines 16 and 18 again? I plan on keeping track of the dollar amounts and dates etc . How does the irs know that I converted a total of $50k from the traditional ira and placed into the Roth IRA bucket. Do I have to put some note on the 8686 form that I previously converted $20k from the prior year?
Just want to ensure the irs understands I want to do a series of Roth conversions and if I have to give the irs notice that my Roth totals will be increasing over time due to these conversions
Thanks for any insights.