Basis in an IRA

[jebmke]

Quote:

Originally Posted by gauss This is one of the main reasons that I mention that if there is no good reason to roll a 401k to an IRA then don't do it. With a 401k the plan sponsor is responsible for tracking basis and reporting taxable amount to you for each distribution. With an IRA, on the other hand, the taxpayer is responsible for keeping track of this over the long term. -gauss

If is fairly easy now to roll the after-tax portion to a ROTH IRA now. I did a split roll in 2013; my AT amount went to ROTH and the pre-tax part to a Rollover IRA.

[Texas Proud]

Quote:

Originally Posted by gauss You can go back ~ 10 years and request copies of your "Wage and Income" transcripts for each year from the IRS. The form 5498s should be especially enlightening in helping you reconstruct this in that they show contributions, rollovers, conversions etc received by each IRA/401k each year. If you have all of your 5498s and 1099-Rs and tax returns then you should be able to figure this out. -gauss

I have all of my tax returns on PDF from 2007 to 2017 right now except 2008. Since it is the 2007 where I see the form I would need returns prior to that.



Now that I have been thinking about this for a bit... I wonder if I had done a back door ROTH. This would be a reason that I do not have a tIRA to match this too. Need to find that 2008.

[Sunset]

Quote:

Originally Posted by Texas Proud I have all of my tax returns on PDF from 2007 to 2017 right now except 2008. Since it is the 2007 where I see the form I would need returns prior to that. Now that I have been thinking about this for a bit... I wonder if I had done a back door ROTH. This would be a reason that I do not have a tIRA to match this too. Need to find that 2008.

I don't see why as the 8606 is a ongoing, total for the current year, so it has the numbers from the beginning of time.

It will mean a savings of your highest tax rates whenever you withdraw from an IRA, so it could easily be worth nearly 2K of taxes over your life time.

If you use tax software, the hard part is the first time, after that, the software keeps track.

[Texas Proud]

Quote:

Originally Posted by Sunset I don't see why as the 8606 is a ongoing, total for the current year, so it has the numbers from the beginning of time. It will mean a savings of your highest tax rates whenever you withdraw from an IRA, so it could easily be worth nearly 2K of taxes over your life time. If you use tax software, the hard part is the first time, after that, the software keeps track.

Actually the software did not put one in for 2008... I did change from 2007, but it should have read that info...

[cathy63]

Quote:

Now that I have been thinking about this for a bit... I wonder if I had done a back door ROTH. This would be a reason that I do not have a tIRA to match this too. Need to find that 2008.

It's pretty easy to figure out if you did a backdoor Roth conversion. Look at Part II on page 2 of the form 8606. If you see numbers there, then you did a conversion. If the balance on line 14 in Part I is $0, then you do not have a tIRA with a basis and you were just using 8606 to report the backdoor Roth.

Quote:

Originally Posted by Texas Proud Actually the software did not put one in for 2008... I did change from 2007, but it should have read that info...

No form 8606 was required in your 2008 return. You only need to file one if the numbers on it would have been different from the last time you filed it, and it sounds like you didn't do any transactions in 2008 that would have changed your basis, so no 8606 was generated.

The problem with switching back and forth between various tax programs is that some programs can only import a PDF version of your return instead of a data file, so anything that's carried in the background and is not on the actual return can't be read. Even if the software you used in 2008 correctly read the 2007 version of the 8606, if you then changed software again in any subsequent year after not filing an 8606, your data would likely have been lost then.

Going forward, assuming you do have a basis on line 14 of the 2007 form 8606, I would just print a copy of that 2-page form, and every year, move it into the current year's tax folder. You won't need the info again until you withdraw from the tIRA. Even if you believe that your current tIRA is entirely pre-tax money, the IRS believes something different; and it's too late now to correct their records, so at this point, you should act as if they have the correct data.

[karen1972]

I always wondered how the Govt tracks this in the first place.. like is there some database somewhere actually tracking this and if so shouldn't I be able to get a statement? I've always had a hunch that they only have whatever you submitted in your last tax return as for cost basis. which means if you weren't reporting it the last several returns, not sure how you go about correcting it, other than re-filing or keeping those tax records up to the time you withdraw so you had evidence.

I started getting confused between conversion, contributions, rollovers, switching brokerages, withdrawals due to over contribution, etc its was getting hard to for me to remember so started keeping a spreadsheet.

[youbet]

My post tax (non-deductible) IRA contributions were significant and more than one half of my IRA was "basis." It turns out that made it less expensive tax-wise to convert to a Roth, so I did convert over a few years. After I finished the Roth conversion, I converted my 401k to a Rollover IRA which has zero basis and no 8606 involved.

Bottom line - my taxes were slightly more complicated during my Roth conversion years because of having a basis in my TIRA, but not bad. I think people overstate the complications of form 8606 which TurboTax handles easy-peasy.