Traditional IRA Contribution
Married -AGI 2007 is approx $180,000 – can I still make a non-deductible IRA contribution for 2007 for myself?
I have 401K, traditional and Roth IRA.
Is it worthwhile to do this?
If yes, does form 8606 need to be included with my tax return?
Permalink Submitted by Janine Janine on Sat, 2008-04-12 17:52
I am puzzled. If the contribution is non tax-deductible, why would you want to put the money in a TIRA instead of a Roth IRA? Or are you really asking if you can contribute the maximum to each: a TIRA and another $5000 (or $6000 if over 50) to a Roth?
Permalink Submitted by Al Fry on Sun, 2008-04-13 00:59
MAGI would be too high to contribute to a Roth. It makes sense, if you have no other IRAs, as one can convert to a Roth in 2010, without income limitations. 8606 needed.
Permalink Submitted by Edward Czapor on Sun, 2008-04-13 03:16
Al,
With any non-deductible contribution to a TIRA, a Form 8606 should be filed to establish basis. This is true even in this situation, where by default, it is the only type of contribution that can be made.
Ed C
Permalink Submitted by Janine Janine on Sun, 2008-04-13 13:39
[quote=”[email protected]“]Al,
With any non-deductible contribution to a TIRA, a Form 8606 should be filed to establish basis. This is true even in this situation, where by default, it is the only type of contribution that can be made.
Ed C[/quote]
I hope that this is not true since my son has been contributing to a Roth IRA for several years and has never filed a Form 8606.
Permalink Submitted by Edward Czapor on Sun, 2008-04-13 14:12
A Form 8606 is NOT filed when making a Roth contribution. However, basis in contributions or conversions must still be kept track of in the event nonqualified distributions are taken, for which an 8606 would be required.
Permalink Submitted by Al Fry on Sun, 2008-04-13 16:12
Sorry I confused the 8606 question. 8606 is not needed with a Roth contribution or Roth conversion. It IS needed (1) for any conribution to a TIRA that was not deductible; (2) when a rollover to a TIRA is made from a qualified plan that has cost basis (after tax contributions, PS-58 costs, etc.); and (3) when making distributions from a TIRA, SEP or SIMPLE IRA, if non-deductible contributions had been made earlier in ANY IRA.
Permalink Submitted by [email protected] on Sun, 2008-04-13 22:48
Re “8606 is not needed with a Roth contribution or Roth conversion.”
The current Form 8606 says to complete Part II “if you converted part or all of your traditional, SEP and SIMPLE IRA’s to a Roth IRA in 2007 …”
Permalink Submitted by Al Fry on Sun, 2008-04-13 23:04
The rest of the quote: If “You converted part, but not all, of your traditional, SEP, and SIMPLE IRAs to Roth IRAs in 2007 (excluding any portion you recharacterized) AND you made nondeductible contributions to a traditional IRA in 2007 or an earlier year”. In other words, to show what portion would not be taxable.
Permalink Submitted by Alan Spross on Mon, 2008-04-14 02:52
There is also Part II of Form 8606, which should be completed even when Part I is not required. The reason for this requirement is likely to provide a breakdown for line 15b, since the conversion 1099R is no different than a regular TIRA distribution 1099R, and there is the MAGI income limit for conversions.