Form 8606: Post Roth Conversion
In 2011 I had isolated my ND T-IRA basis (Solo401K accepts pre-tax roll overs). 2012 added a ND T-IRA contribution. All funds where converted to Roth in 2012.
We are now wrapping up our 2012 Tax Filing.
Please review. Line 6: is now -0-. Line 8: is the sum total converted. Line 14: essentially line 3; or -0- now that line 6 is -0-. Is there any need to track basis now that ND contributions will be converted yearly?
Are Roth conversions/ contributions tracked anywhere other than my spreadsheet?
Thank-you Alan et.al.
Permalink Submitted by Alan - IRA critic on Wed, 2013-10-02 00:33
If you do your conversion immediately after making the contribution, line 14 should be -0- and you will have no basis to bring forward to the following year. Sounds like you are completing the 8606 correctly and your conversion would use up your basis and be tax free. Next year you make another ND contribution, convert it immediately and repeat the same cycle. The 8606 is what the IRS uses to track your basis as you add to it by making ND contributions and deplete it by taking distributions or doing conversions. Your contribution amount and conversion amounts are also reported to both you and the IRS on Form 5498 issued the following May. The IRS then matches up the 5498 with your tax return and form 8606. Not sure if this answers your question.