Correcting Non Deductible Basis in TIRA – Form 8606

Submitted by Blue_Sky on Sat, 2020-10-24 17:55

Planning to do a series of Roth conversions next year, and discovered my basis is off. Looking back, it appears that it was last correctly reported in 2012, then . Starting in 2015, out tax preparer neglected to include and 8606, and the next year it was off, so 2016 -2019 are all off.

I’d ideally want to just send in a corrected 2019 8606 with the new basis and a letter explaining the whole mess and leave it at that, but I’ve also read I need to send in an 8606/letter for EVERY year that was off, starting with the first incorrect year.

Which method is recommended? I don’t want to have to go back and forth with the IRS, and I can see why doing it for each year may makes sense. If I have to do each year separately, should I bundle them all in all in a single mailing, or, send each year in sequence, maybe two weeks apart, to give them a chance to update their system?

I’ll need to replicate this for my wife’s 8606 as well.



Submitted by Alan - IRA critic on Sat, 2020-10-24 22:52

You do not need to send a letter, but you do need to start with the oldest year and file the correct edition for that year, since each year builds on the prior year. You can send them all in a single envelop, and you are correct that separate 8606 forms are needed for each spouse. This will get messy if either of you have taken any distributions including conversions in the years since 2015, so please advise if that is the case.  Sounds like earlier 8606 forms were just omitted, but if any were actually incorrect, they should be marked “amended” at the top. Suggest just one blanket note with all the forms indicating that the new forms do not affect any prior returns, as no distributions have been taken from 2015 to present.

Submitted by Blue_Sky on Sun, 2020-10-25 14:27

Are we counting a distribution that was a rolled over from one TIRA custodian to another (i.e., Fidelity to Vanguard)? There have been no distributions that were for “cash puposes.” Also, how much detail on the revised 8606 do I need to go into? Can I just fill out lines 1-3 and 14?

Submitted by Alan - IRA critic on Sun, 2020-10-25 15:44

No, rollovers do not count and do not generate any taxable income. With respect to the retroactive 8606 forms, if all you did that year was make a non deductible TIRA contribution, but failed to report it, you are correct that the contribution only goes on line 1, the total basis from line 14 ofthe prior valid 8606 filed goes on line 2 and the total on line 3 and 14. The next 8606 will bring forward the line 14 total to line 2 of the more recent 8606. That is all you need. This is very simple as long as there were no taxable distributions in this range of years. You can then send them in together with a single note that will apply to all of them. Suggest that your wife’s 8606 forms be sent in a different envelop than yours.

Submitted by Blue_Sky on Sun, 2020-10-25 16:26

 Just curious since I know you’ll know….what were the ND contribution guidelines for years 2001-2011 in terms of limits (I turned 50 in 2008 so any “Over 50” catchup allowed starting that year)? And for years 2016-2018, check the “if this is an amended return” checkbox, correct? It does not appear for 2015 and earlier, nor for 2019.Thanks so much for the guidance.

Submitted by Alan - IRA critic on Sun, 2020-10-25 18:09

Submitted by Blue_Sky on Mon, 2020-10-26 20:08

I made contributions to a TIRA during years 2001-2008, but no longer have copies of my returns, and thus, no 8606’s. Were there any guidelines or rules in place during those years that would help me know whether these contributions were non-deductible or not? I don’t have W-2’s either, so cannot use income in determining ND status.

Submitted by Alan - IRA critic on Mon, 2020-10-26 20:46

Submitted by Blue_Sky on Mon, 2020-10-26 21:27

What I can confirm is that I did participate in employer workplace retirement plans most of those years. I do have my 5498’s from those years, which as you mention, shows my contributions (only 2008 is a Roth), but no indication of ND status. Years 2001-2003 were only rollovers; years 2004-2007 were rollover funds AND direct contributions. The only other way I can think of to estimate annual income for those years would be to go through the Social Security website and check my historical earnings record maybe?

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