rollover IRA that has taxable and non-taxable Contributions

Submitted by Patrick Valenty on Fri, 2017-09-08 15:34

Investor has rollover IRA with Taxable and non taxable money. Was told to clear 8606 needed to roll taxable portion to his present 401k and the nontaxable to his current Roth. 401k does not accept rollovers.

What does he do to clear his rollover and not not have provide a 8606 for the rest of his life???????

If he just rolls his non-taxable to his Roth can that do away with is 8606??????



Submitted by Alan - IRA critic on Fri, 2017-09-08 19:56

Investor needs a present of future employer plan that accepts pre tax IRA rollovers. Otherwise, he is stuck with the 8606 for as long as he has a TIRA, SEP IRA or SIMPLE IRA balance. If he converts to Roth, Form 8606 will calculate the taxable/non taxable amounts of the conversion. These amounts cannot be separated. But Form 8606 is not that difficult to file, particularly if a tax program is used. There are just a couple of inputs to be made each year. 

Submitted by Patrick Valenty on Tue, 2017-09-12 16:23

Thank you for taking the time to reply.  I appreciate it.

Submitted by William Tuttle on Fri, 2017-09-08 23:06

Another option is to find a way to generate self-employment income. Then adopt a one-participant 401k plan that accepts incoming rollovers from IRAs. Then rollover the pre-tax amount to this 401k and the taxable to a Roth IRA. If the total contribution + rollover amounts ar >= $250K this would require the filing of Form 5500-EZ.

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