Form 8606 – Qualifying Trust
A friend converted a 401k plan with a “see through” trust as the beneficiary to a Roth in 2010. Form 8606 says it is just for 1040, 1040NR. There’s no 1041 equivalent that I can see. I told her to complete the 8606 and attach it to Form 1041.
Any other suggestions?
Permalink Submitted by Alan Spross on Sun, 2011-04-10 00:45
Hi Mary Kay,
I think your solution is the best available. The 8606 apparently got brought into the mix for 2010 only because it seems to be the focal point for reporting the two year deferral for Roth conversions. It was not needed prior to 2010 and will probably not be needed after 2012 for direct conversions.
This brings up another question. If an individual does a 2010 conversion and then passes before 2012, the remainder of the conversion income must be reported in the year of death. But what happens if a qualified trust beneficiary defers the conversion income and any beneficiary of the trust passes or the trust is terminated prior to 2012? Conversion income accelerated?
When TIPRA was passed in 2005, they weren’t contemplating QRPs and beneficiary conversions to Roth IRAs, so never expected a 1041 to come into play, and the IRS may never have fully caught up with the merging of all these portability enhancements.