Traditional and Roth IRA contributions by parent to adult children’s accounts
Over a period of 20 plus years, parent made contributions to Traditional and Roth IRA accounts of adult children. Children unaware. Children did not deduct any of the Traditional IRA Contributions. Appears that children have tax basis in some or all of these contributions. Looks like Form 8606 and Form 5329 applicable for the adult children.
Thoughts please.
Thank you.
Permalink Submitted by Alan - IRA critic on Thu, 2022-01-13 15:31
The 2018-2020 returns could be amended to claim a deduction where allowed. Normally, parents make Roth contributions for children when they are minors. In order to file retroactive 8606 forms to claim basis, complete records would be needed (possibly Forms 5498) for all these years to determine if the children had earned income to support any contribution. Household chores do not qualify. The amount and type of all contributions need to be determined including the amount of any excess contributions before even thinking about filing a series a chronlogical 8606 forms to claim IRA basis. Form 5329 does not apply unless excise taxes are due for excess contributions.