- Made nondeductible contributions to a traditional IRA for the year, including a repayment of a reservist distribution.
- Received distributions from a traditional IRA, SEP IRA, or SIMPLE IRA during the year and his/her basis in his traditional IRAs and/or SEP IRAs is more than zero. For this purpose, a distribution does not include a rollover, qualified charitable distribution, a one-time distribution to fund an HSA, conversion, recharacterization, or return of certain contributions.
- Converted an amount from a traditional IRA, SEP IRA, or SIMPLE IRA to a Roth IRA during the year (unless he/she recharacterized the entire conversion).
- Rolled over an amount from a qualified retirement plan (other than a designated Roth account) to a Roth IRA during the year, unless the entire rollover was recharacterized
- Received distributions from a Roth IRA during the year (other than a rollover, recharacterization, or return of certain contributions).
- Rolled over an amount from a 401(k) or 403(b) plan to a designated Roth account within the same plan (in-plan Roth rollover)
- Made a repayment of a qualified hurricane distribution that is attributable to previously nondeductible contributions.
- Recharacterized less than 100% of a contribution or Roth conversion
- Received a distribution from an inherited Roth IRA that was not a qualified distribution or from an inherited traditional IRA that has basis or you rolled over an inherited plan account to a Roth IRA.
- Special 2010 Rules: Received a distribution from a designated Roth account after September 27, 2010, that is allocable to an in-plan Roth rollover (only if the in-plan Roth rollover is included in income in 2011 and 2012).
- If the IRA owner recharacterized a Roth IRA contribution as a traditional IRA contribution, or vice versa, he/she should treat the contribution as having been made to the IRA to which the amount is recharacterized.
- For purposes of Form 8606, a traditional IRA is an individual retirement account or an individual retirement annuity other than a SEP IRA, SIMPLE IRA, or Roth IRA.
Important: The Tax Cuts and Jobs Act of 2017 repealed the option to recharacterize Roth conversions, for Roth conversions done after 2017. As such, only regular contributions to traditional IRAs and Roth IRAs may now be recharacterized.
Additional Helpful Information
- An IRA owner does not have to file Form 8606 solely to report regular contributions to Roth IRAs.
- Form 8606 should be filed with the IRA owner’s Form 1040, 1040A, or 1040NR. If the individual is not required to file an income tax return but is required to file Form 8606, he/she should sign Form 8606 and send it to the Internal Revenue Service at the same time and place that Form 1040, 1040A, or 1040NR would otherwise be filed
- Amending Form 8606 : After the IRA owner files his/her return, he/she can change a nondeductible contribution to a traditional IRA to a deductible contribution or vice versa. If necessary, a new Form 8606 must be completed (showing the revised information) and filed with Form 1040X, Amended U.S. Individual Income Tax Return.
- Penalty for Not Filing : If the IRA owner is required to file Form 8606 to report a nondeductible contribution that he/she made to a traditional IRA, but does not do so, he/she must pay a $50 penalty, unless he/she can show reasonable cause for not filing the form
- Overstatement Penalty: If the IRA owner overstates the nondeductible contributions, he/she must pay a $100 penalty, unless reasonable cause can be shown.
- Advance Copies of Forms can be found here
- “Form 8606 is not used for the year that you make a rollover from a qualified retirement plan to a traditional IRA and the rollover includes nontaxable amounts. In those situations, a Form 8606 is completed for the year you take a distribution from that IRA. See Form 8606 under Distributions Fully or Partly Taxable later.
- However, if you are required to file this year, you may need to enter an amount other than -0- or adjust the amount from the chart if your basis changed because of any of the following… You rolled over any nontaxable portion of your qualified retirement plan to a traditional or SEP IRA that was not previously reported on Form 8606, line 2. Include the nontaxable portion on line 2.”