Cost basis of Rollover IRA on Form 8606
I have been filing a Form 8606 to track the cost basis of my traditional IRA for a number of years. This past year I rolled over a 401K into a traditional rollover IRA. Received a 1099 R from Fidelity detailing the Gross distribution (box1), the taxable amount ($0.00, box 2a), and the employee contribution amount (box 5). Where and how do I account for the increase in the basis of my IRA’s on Form 8606?
Guidance is appreciated.
Permalink Submitted by Alan Spross on Mon, 2012-03-26 23:15
The box 5 amount is an addition to your IRA basis. However, unlike making non deductible contributions to your IRA when you file the 8606 for each year you make such contributions, rollovers of after tax contributions from employer plans are listed on the NEXT 8606 you would otherwise file on line 2.
For example, if your 2010 8606 ended up with a cumulative basis on line 14 of 12,000, and in 2011 you made a non deductible TIRA contribution of 5,000 and rolled over the after tax 401k amount of 14,000, you would show 5,000 on line 1, 26,000 on line 2 and line 3 would be the new total of 31,000.
If you do not have to file an 8606 for 2011, be sure to make a notation to yourself such that you do not forget to add the Box 5 amount to your line 2 on the next 8606 you would otherwise file.