Inherited IRA and 8606 for Annual Conversion
I have a client with I401k and Roth. We do contributions to I401k instead of SEP so that we can do annual back door Roth for her. She just inherited an IRA this year and now has a $500k Bene IRA that we have to distribute over 10 years. Can we still do her back door Roth? The 8606 asks for value of all Traditional IRA’s–does the Inherited Traditional IRA count on that and now create an issue for her? Or do we exclude the Bene IRA from the 8606 as it is not “hers.” I can’t seem to see something on this in the forum.
Permalink Submitted by David Mertz on Wed, 2023-09-06 15:38
The inherited IRA is not a factor in determining the taxable amount of any Roth conversion that she does. The balance in the inherited IRA is *not* to be included on line 6 of her Form 8606.
Permalink Submitted by William Tuttle on Thu, 2023-09-07 02:57
A separate Form 8086 may be required for the inherited IRA. For example, if the decedent had non-deductible traditional IRA basis. An Inherited IRA Form 8086 would be required to report prorata taxation.