Roth Recharacterization forms
Client overfunded Roth due to income limits. I am doing the custodians rechar and trad IRA forms.Question- when does he have to file an amended return? By 0ct 15 also? Is is form 5329? If not what form?
Thank you
snakecharmer
Permalink Submitted by Alan Spross on Mon, 2008-10-06 17:36
If client is fully recharacterizing a 2007 Roth contribution to a TIRA and cannot deduct the TIRA, a Form 8606 for 2007 should be filed to report the non deductible contribution. There is no time limit, but it should be done before year end. This can be done on a stand alone basis. No 5329 needed.
An amended return is only needed if the TIRA contribution will be deductible. However, an explanatory statement with the 8606 for 2007 should be sent to the IRS explaining the dates and amounts of the Roth contribution and the recharacterization. Since no numbers would change on the 2007 return, the full 1040X is not needed.
If the situation differs from what I described, please advise.
Permalink Submitted by steve jackson on Tue, 2008-10-07 00:00
He is only doing a partial Recharacterization. After calculations due to income he only qualifies for a few thousand( he contributed 5k). Does 8606 still apply or am I wrong
Snakecharmer
Permalink Submitted by Alan Spross on Tue, 2008-10-07 00:23
Yes, for a partial recharacterization of a Roth contribution, an 8606 is still needed to show the amount that is considered a non deductible TIRA contribution. This is not the same amount that actually moves to a TIRA, but the amount of the original contribution that was not allowed as a Roth contribution.
The explanatory statement is still needed explaining the numbers of the partial recharacterization.