nondeductible 401(k) contributions rolllover to IRA
Client had a 401(k) with former employer which included some nondeductible after-tax contributions. Former employer tracked the value of that separate account.
Several years ago client left employer and rolled 401(k) to an IRA account.
Can the client now get credit for the nondeductible contributions? Can he now file a Form 8606 to account for them? If so, is it the amount he contributed after-tax to the 401(k) or the value of the separate account when it transferred to the IRA?
Client is now in his 50s.
Thank you in advance for your help.
Art Dicker
Permalink Submitted by Alan - IRA critic on Fri, 2015-08-28 21:13
The after tax amount contributed in the 401k that was rolled into an IRA should be reflected on line 2 of Form 8606 in the first year that an 8606 would otherwise be needed. Earnings on those after tax contributions would not be included in the 8606 figure. If he has not taken any IRA distributions or made any non deductible contributions since the rollover, he just needs to make a large note to himself to remember to include the line 2 entry when he next must file the 8606.
Permalink Submitted by Arthur Dicker on Mon, 2015-08-31 12:31
Thank you, Alan!