Voluntary contributions to my Employers Defined Pension Plan beg in 1975, NO 8606s
Over the period from 1975 to 1987 I made nine after tax voluntary contributions totalling $37k to my employer’s defined benefit pension plan. NO 8606 forms were ever completed as the perception was “this was not an IRA” (I did have an IRA during the period, but stopped contributing when I did not qualify for a deduction).
In 2004 I did an $88k direct rollover IRA from my pension account(1099-R box 2a was $0.00, total distribution was “X”, box 7 was code “G”). I assume the indication of a “total distribution” was in error. The Voluntary Pension plan account for me now has a current balance of $80k (earnings and the $37k of after tax contributions).
How would I safely secure the after tax (tax free amount of $37k) for future proration against taxable distributions via the 8606? Can I successfully submit 8606’s for each year with a cover letter pleading my case for no penalty? I am now 66 years old and would like to address the solution before the first RMD.
FYI… my wife and I also have Roth IRA’s. I do have documentation (confirms and statements) for the nine investments in funds within the my Voluntary Pension account.
G
Permalink Submitted by Alan - IRA critic on Thu, 2013-03-21 21:21
You can file a Form 8606 for the first year you otherwise would need one and show the 37k on line 2 of Form 8606. But if you want to flush out any IRS challenge to this basis prior to RMDs, you might consider filing the 8606 using a 2004 edition and reporting the line 2 basis from the rollover of after tax contributions to the pension (do this only if you have not taken TIRA distributions since 2004 that would have recovered any of this basis). However, if the IRS challenges this, you may need to produce a copy of the 1099R, which the IRS would likely rather review than copies of your plan statements. The 1099R should show your 37k of basis in Box 5, but you did not mention a Box 5 entry???
Permalink Submitted by G Ewers on Thu, 2013-03-21 22:53
Alan… Box 5 is BLANK on the 1099-R for 2004. I did retire early and had a taxable monthly benefits that year totaling $40k (1040, line 16b). Line 16a showed $128k (88k Rollover plus 40k of pension). Turbo Tax printed “ROLLOVER” in the margin to th left of line 16a. The 1099-R was not attached to the return (no tax W/H). Your thoughts?Thanks, G
Permalink Submitted by Alan - IRA critic on Thu, 2013-03-21 23:14
Everything sounds normal except for the lack of the Box 5 entry of your basis. See p R-8 of the attached: http://www.irs.gov/pub/irs-prior/i1099r–2004.pdf . If you are sure of this basis, and if your statements are not sufficiently clear to verify it to the IRS if they ask, you might consider contacting the company and if they agree that the 1099R was wrong, try to get them to issue you a letter verifying that Box 5 should have contained the basis amount. This would be “insurance” that the IRS would accept your 8606 if they question it.