8606 not filed
I have a client that rolled over an employer plan into his IRA in 2005. Approximately 25% of the rollover was his own after tax contribution. His tax preparer did not file form 8606. What is best way to handle this so that he can get credit for after tax dollars once withdrawals start? Thanks for any responses.
Permalink Submitted by Alan - IRA critic on Thu, 2013-10-24 20:25
According to IRS instructions, when after tax contributions from an employer plan are rolled into an IRA the 8606 should only be filed in the next year an 8606 would otherwise have to be filed. So starting in 2005 and working forward client should determine if an 8606 would otherwise have to be filed. If no distributions or Roth conversions have been done and no non deductible TIRA contributions made, that 8606 is not yet due. Client should make a clear note to himself to add the after tax portion on line 2 of the next 8606 he would otherwise need to file. If distributions have been taken since 2005, he loses the basis he otherwise should have claimed in closed tax years, and he can amend returns from 2010 on to reflect the appropriate basis for distributions that have been taken, since these years are still open.