Basis of co-mingled IRAs
A discontinued S-IRA has been rolled into T-IRA (which had a net value below basis).
Is the basis of the combined IRA the sum of after-tax contributions into the T-IRA?
Thank-you all for this providing this resource for such questions.
Regards, ju
Permalink Submitted by mk foss on Wed, 2011-12-07 19:00
All of an individual’s IRAs are considered as one for basis purposes. It does not matter where the market value of the accounts are relative to the basis or whether the IRAs are kept separate or co-mingled. Form 8606 is filed whenever a nondeductible IRA contribution is made or whenever there is a withdrawal from an IRA that had basis from previous nondeductible contributions or rollovers from employer plans.
The only time there would be separate basis is if the individual had inherited one or more IRAs with basis. The IRA basis from each decedent must be kept separate from personal IRA basis.
Permalink Submitted by tomtom on Thu, 2011-12-08 05:05
Thank-you,
That feels and is right.
What percent of early non-deductible contributors
have a meaningful 8606 trail?
3 accountants, each mismanaged this trail is some way.
AND I was without direction.
This will be my reset 8606 year, IRAs at zero.
tomtom
Permalink Submitted by Alan Spross on Thu, 2011-12-08 18:46
Each non deductible contribution to a TIRA should be reported on Form 8606 for the year made. If this has not been done, the IRS has been accepting retroactive 8606 forms, and you would start with the oldest year and work forward because the dollar amount accumulates. If a distribution is taken, a pro rated amount of the non deductible contributions is applied and this is also handled on Form 8606.
If you need to reconstruct the history here, it can be a huge job since you would have to compare your prior tax returns with your contribution record per Form 5498. If you have no record of the 5498 forms, you can request copies from the IRS. If a 5498 shows you made a contribution and your tax return does not show a deduction, then you have a non deductible contribution that increases your basis for that year.
When all your 8606 forms have been caught up, you will have a total amount. But if you took prior distributions, you have recovered some of those non deductible contributions.
Not sure what you mean by re-set year or exactly what is at -0-.
Permalink Submitted by tomtom on Sat, 2011-12-10 13:50
Thank-you Alan.
Celebrating all our IRA basis monies converted to ROTH.
Pre-tax monies rolled into 401-K plans.
After this year there will be no IRA assets.
And we can begin back-door ROTH contributions/conversions.
A huge and telling project reviewing 25 years of tax returns.
My- our world has changed..!!
tom
Permalink Submitted by Bruce Steiner on Sat, 2011-12-10 22:54
I don’t know how many people made nondeductible contributions, or how many of them tracked them. I would guess that before 2010 (when taxpayers with income over $100,000 and no previous traditional IRAs could do backdoor Roth IRAs by making nondeductible contributions and immediately thereafter converting them) very few taxpayers made nondeductible contributions. But I would guess that most of those who made nondeductible contributions had relatively high incomes, so they were more likely to track them, or have accountants who could track them.