Basis and withdrawals from 401K
I have been contributing to traditional 401K plans since the early 90’s (2 different employers). I have never taken the IRA deduction. Thus as I understand it, these contributions are all considered “nondeductible” – and would, in total, (without withdrawals) constitute my basis. I took withdrawals in years 2006 through 2008. In my lack of savvy those years I reported the entire withdrawals as “IRA Distributions…Taxable Amount” at full pop, without doing the 8606 calculations/reductions. I have never filed a form 8606. Wasn’t aware there was such a thing until this year. I took a withdrawal in 2009 as well, and am figuring my 2009 taxes. What should I report as my total basis on the 2009 8606? I have copies of 1040’s for all these years showing no deductions whatsoever.
Permalink Submitted by Alan Spross on Mon, 2010-04-12 04:25
I am confused over the type of plan you are referring to. Your title refers to 401k and in your first sentence you mention employer plans. These are totally different plans from IRA accounts and Form 8606 does not apply to them. If you also made non deductible traditional IRA contributions, then you needed to report them on Form 8606. If you did not, then file them retroactively starting with the oldest year, since the forms are cumulative.
There is not enough time to research all this and still get your 2009 return correct, so suggest you file an extension. Year 2006 will be closed as of 4/15, but when you get your basis figured out, you will have to amend 2007 and 2008 to apply the proper amount of basis for those distributions. Then you will know how much basis you have left for 2009, and hopefully would be able to file an accurate return by 10/15/10 for 2009.
The amount of research you will have to do depends on what records you kept with respect to the IRA. If you also have after tax contributions in your 401k plan, the employer will keep track of that. You need only be concerned with traditional IRA contributions made after 1986.