After tax IRA conversion to ROTH
Feb 2013 rolled entire pretax TIRA into employers 401K account. TIRA account balance is zero. March 2013 make $6,000 after tax contribution to my TIRA for 2012, when funds clear, roll $6K into my Roth IRA. Filled out 8606 for the 6K with my 2012 taxes. I would like to make a $6,500 post tax contribution to my TIRA before the end of the calendar year and roll into my Roth Ira. once again. I am confused on how the 8606 should be filled out for 2013 tax year and wondering what the IRS will think of all this when they see my form 5498. Did I mess up?
Pete
Permalink Submitted by Alan - IRA critic on Thu, 2013-05-30 20:53
This is a good strategy on your part, and will cause no problem from the IRS. There will be a Form 5498 for each year reporting your TIRA contribution and another for 2013 showing a combined conversion contribution to the Roth IRA. Your 2013 8606 will bring forward to line 2 your 6k basis from your 2012 8606 and you will report the 2013 contribution of 6.5k on line 1. Total basis of 12,500 and your total conversion of about the same amount shown in Parts I and II. Your two conversions are added together and treated as one total on the Form. However, you do need to include an explanatory statement with your return explaining your rollover to the 401k (amount and date). This is critical since there will be no 5498 issued by the 401k plan reporting receipt of the rollover, so even though the 1099R will be G coded for a direct rollover, the IRS sometimes will want further explanation to be sure that you did not just keep the money. The rest of the strategy of making non deductible contributions and converting them is fairly routine.
Permalink Submitted by Pete Holzgang on Thu, 2013-05-30 21:13
Thanks for you thorough explanation.
Pete