incorrect 1099 R fo Roth conversion
Received 1099-stating full amount of conversion that was 28,000. in box 1-gross distribution $28,000.Box 2 taxable amount was also $28,000. 2b TA not determined is checked as is total distribution also checked. $24,500 of that amount came from four nondeductible IRA contributions the $3,500 was gain. How to rectify if the 24,500 was non-taxable/non-deductible contributions.
SC
Permalink Submitted by Alan - IRA critic on Tue, 2014-04-08 22:25
The 1099R has been completed according to IRS instructions. The full amount shows as taxable in 2a because the custodian has no way of knowing about the non deductible contributions. What needs to be done now is to show the basis of 24,500 on Form 8606 that will result in that amount being non taxable. Of course, an 8606 had to be filed for each prior year a non deductible contribution was made, and the form will update the basis to the new total each year another non deductible contribution was made. You cannot just show the 24,500 total one time in the current year.
Permalink Submitted by steve jackson on Tue, 2014-04-08 22:30
Sounds great we will correct with form with 8606, lesson learned always file 8606 each time, Anything else?
Permalink Submitted by Alan - IRA critic on Tue, 2014-04-08 22:37
If old 8606 forms need to be filed retroactively, they can be completed for each year starting with the oldest and mailed together to the IRS. Starting with the second oldest form, the line 14 amount is brought forward to line 2 of the next 8606 and so on. The current 8606 is filed with the current return on which the conversion is being reported