Form 8606
I have made non deductible contributions to a TIRA account for a number of years but failed to file Form 8606 each year. Now I want to transfer the funds to a Roth IRA and see after reading the Form 8606 instructions that I have not properly filed previous Forms 8606. Can I still make the tranfer to the Roth IRA without imposing any penalties or having to pay tax on the original basis in my non deductible TIRA that I transfer to the Roth IRA?
Permalink Submitted by Alan Spross on Fri, 2010-03-26 21:46
Yes, you can still convert and get credit for your basis, but you MUST retroactively file all those missing 8606 forms starting with the oldest year and working forward because the form produces a cumulative total basis. The IRS has been waiving fees for this, just as long as you do not overstate your basis. These forms can be filed together with an explanatory statement and should be done before you report your conversion. You cannot take credit for any basis unless you have filed the forms reporting that basis for each year.
The first year you could have made a non deductible contribution was 1987, and this could be a nasty research project unless you have kept good IRA and income tax records to compare when you may have made non deductible contributions. If you have taken distributions in the mean time and applied any basis, your remaining basis will be reduced.