inherited ira
since an inherited ira can not be converted to a roth ira is th inherited ira amount included in line 6 of form 8606 to determine ratio between deductible and non deductible amounts for th e proration formula?
since an inherited ira can not be converted to a roth ira is th inherited ira amount included in line 6 of form 8606 to determine ratio between deductible and non deductible amounts for th e proration formula?
Permalink Submitted by Alan Spross on Fri, 2011-05-27 20:54
An 8606 for owned IRAs are totally separate from an 8606 for inherited IRAs. Basis in owned IRAs are never combined with inherited IRA basis unless a spousal beneficiary assumes ownership of the inherited IRA.
Therefore, line 6 for owned IRAs would not include the value of any inherited IRAs (and line 2 would not include their basis either).
If a beneficiary inherited more than one IRA account from the same original decedent, then line 6 would combine the values of those inherited IRAs.
This has been the case long before Roth conversions, when these rules only applied to taxable distributions from IRAs. Therefore, if Congress eventually allows inherited non spouse IRAs to be converted to inherited Roth IRAs, the basis and the value of the inherited IRA will have to remain separate from any owned IRAs.