Form8606 Part II
I converted about 8 different TIRAs to RIRAs last year. I am not familiar with the form 8606. Will I have to fill out 8 different forms to show that I converted the TIRAs to RIRAs. This will keep me from paying the 10% penalty because I am 56 years old?
Permalink Submitted by Alan Spross on Tue, 2009-02-03 18:25
No, you only need one 8606. For purposes of this form, all your TIRA accounts are considered as one combined account. Add up all the conversions and report the total.
8606 has multiple functions. If you ever made non deductible contributions to your TIRA accounts, you should have reported them in the year you made them. The amount of these contributions is considered your “Basis” in your TIRA. If you have this situation, the portion of your conversion that represents these non deductible contributions will be tax free. This is handled by Part I of the form when you report the conversion. So you will need to determine if this applies to you or not.
If you never made non deductible contributions, then just complete Part II of Form 8606. This identifies your conversion and a conversion is NOT subject to the early withdrawal penalty of 10%, just regular income tax on the taxable portion of your conversion.
Also, if your conversions suffered large investment losses or for whatever other reason you do not wish to pay the extra taxes, you can recharacterize (reverse) some or all of those conversions and you will not be taxed on them.