Form 8606 for recharacterization

Submitted by Bob Williamson on Wed, 2015-07-08 22:59

In 2014 I did a Roth conversion from my TIRA to Roth. In April 2015 I did a complete recharacterization back to a TIRA, including earnings. Now I am filling on my form 8606 to file under a filing extension. I’m puzzled over what to put in line 6 of Part I. I know that I should add in the amount of the conversion. But should I also add in the earnings?

I need to file form 8606 since my TIRA is now paying out RMDs, with a portion of nondeductible contributions.



Submitted by Alan - IRA critic on Wed, 2015-07-08 23:54

  • Yes, the earnings adjustment should be included. For line 6 enter the total of your actual TIRA balance on 12/31/2014 PLUS the dollar amount that transferred back to your TIRA when you recharacterized the conversion. That will also be the amount that will show on your recharacterization 1099R that you will receive next January. Accordingly, that amount will include the earnings calculation (+ or -) included in the recharacterization.
  • This eliminates the need for an additional calculation to determine what the value of the conversion would have been on 12/31/2014, so there is a simplicity trade off at the expense of producing a more accurate figure.
  • Note that this same methodology applies in determining the 12/31/2014 balance for purposes of calculating your 2015 RMD. The actual IRS Reg is found in the RMD Regs, but the line 6 instructions in the 8606 Inst fail to define the recharacterization value to be included, so it is logical to use the same criteria as specified for the RMD determination.

Submitted by Bob Williamson on Thu, 2015-07-09 05:57

Thanks, that makes sense to apply rhe same returned amount with earnings both for the RMD and also for the basis determination on form 8606.

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