lifetime withdrawals reporting; conversion 5 year rule
I have been reporting the withdrawals only on 1040 as IRA distributions, fully taxable. I’ve been told I should also use 8606—WHY? Since the withdrawals more than cover the RMD, I do not report RMD as such.
This person also told me that my earlier conversions were ‘subject to the five year rule’. Since I was 70+ with all conversions I thought these monies were immediately available without the 5-year waiting period.
Thanks.
brndflc
Permalink Submitted by Alan - IRA critic on Mon, 2014-11-03 23:29
The 5 year holding period for conversions ends at 59.5, so you have not had a holding period for several years now. However, once you are subject to RMDs, you must complete the RMD before converting any additional amounts. You would be taxed on both the RMD and the conversion. You do not need an 8606 to report Roth distributions once your Roth is qualified. If your first Roth contribution of any type was prior to 2010, your Roth is qualified. Otherwise you need the 8606 to report Roth distributions. And if your TIRA has non deductible contributions in it (basis), you also need an 8606 to calculate how much of a conversion or RMD is taxable.