Basis in an IRA rollover

Submitted by Joe Marchbein on Wed, 2023-03-29 18:16

Client retired in 2021 and in 2022 rolled over into an IRA a 401(K) retirement plan from his former employer. Later in 2022, he took a distribution ( it was not a RMD- he is 68) from the IRA. He had other nondeductible IRA. The issue is for the new IRA, does he get to reduce the 2022 distribution by the allocable part of the basis in the “older” nondeductible IRA.
Think the answer is yes.



Submitted by Alan - IRA critic on Wed, 2023-03-29 19:54

Yes, all IRA accounts are treated as one combined account when applying basis on Form 8606. The year end total of all non Roth IRAs must be shown on line 6 of Form 8606.

Submitted by David Mertz on Wed, 2023-03-29 19:57

Yes, all of the client’s traditional IRAs, including the rollover IRA, are treated as a single IRA on Form 8606 when calculating the taxable amount of the distribution from any of the client’s traditional IRAs.  The amount on line 6 of Form 8606 will include the year-end balance of both of these IRAs.

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