Form 8606, line 6 Question


J

june

In 2003 I started to receive 701/2 distributions from a old
traditional IRA that includes non-deductible contributions.
I also started to receive distributions from a traditional
IRA that was a rollover from an employee savings plan. Thus
this IRA has zero non-deductible contributions.

My question is: should line 6 of form 8606 be the 12/31/03
value of only the old traditional IRA, that includes
non-deductible contributions, or should line 6 also include
the value of other IRA that has no non-deductible
contributions ?

Thanks in advance.
 
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P

Phil Marti

june said:
My question is: should line 6 of form 8606 be the 12/31/03
value of only the old traditional IRA, that includes
non-deductible contributions, or should line 6 also include
the value of other IRA that has no non-deductible
contributions ?
The "A" in IRA stands for Arrangement, not Account. As the
instructions to the 8606 tell you, you have to toal all your
traditional IRA accounts to get that number.

Phil Marti
Topeka, KS
 
R

Rich Carreiro

june said:
In 2003 I started to receive 701/2 distributions from a old
traditional IRA that includes non-deductible contributions.
I also started to receive distributions from a traditional
IRA that was a rollover from an employee savings plan. Thus
this IRA has zero non-deductible contributions.
You're thinking about it wrong. You only have one IRA (the
"A" is for Arrangement, not "Account"). That IRA may be
broken into multiple accounts, but it is only one IRA.

For the purposes of Form 8606, you have to aggregate *all*
your traditional IRA accounts as if they were a single
account before you complete 8606. In other words, when 8606
asks about the value of your IRA, it wants the total value
of all your traditional IRA accounts. When it asks about
non-deductible contributions, it wants the total amount of
all non-ded contributions made to any of your trad IRA
accounts.

In other words, the moment one makes a non-deductible
contribution, it becomes part of *all* your trad IRA
accounts. You can't think about the non-ded contribution as
living in only the account it was made do.
My question is: should line 6 of form 8606 be the 12/31/03
value of only the old traditional IRA, that includes
non-deductible contributions,
No.

or should line 6 also include
the value of other IRA that has no non-deductible
contributions ?
Yes.
 
B

Bill

(e-mail address removed) posted:
In 2003 I started to receive 701/2 distributions
from a old traditional IRA that includes
non-deductible contributions. I also started to
receive distributions from a traditional IRA that
was a rollover from an employee savings plan.
Thus this IRA has zero non-deductible
contributions.
My question is: should line 6 of form 8606 be
the 12/31/03 value of only the old traditional
IRA, that includes non-deductible
contributions, or should line 6 also include the
value of other IRA that has no non-deductible
contributions ?
Hi, June. One virtue of IRS Forms is that they always mean
exactly what they say: In other words, you should total the
12-31-2003 value of *all* of your IRA holdings on line 6.
Later entries and calculations will determine what amount is
_nontaxable (from the non-deductible contributions you
made).

Hope this helps.

Bill
 
F

Frank S. Duke, Jr.

In 2003 I started to receive 701/2 distributions from a old
traditional IRA that includes non-deductible contributions.
I also started to receive distributions from a traditional
IRA that was a rollover from an employee savings plan. Thus
this IRA has zero non-deductible contributions.

My question is: should line 6 of form 8606 be the 12/31/03
value of only the old traditional IRA, that includes
non-deductible contributions, or should line 6 also include
the value of other IRA that has no non-deductible
contributions ?
You lump them all together for purposes of determining the
amount that is recoverable tax free.

All freely provided advice guarantee correct or double your
money back

Frank S. Duke, Jr. CPA
Cincinnati, OH USA
 
H

Harlan Lunsford

june said:
In 2003 I started to receive 701/2 distributions from a old
traditional IRA that includes non-deductible contributions.
I also started to receive distributions from a traditional
IRA that was a rollover from an employee savings plan. Thus
this IRA has zero non-deductible contributions.

My question is: should line 6 of form 8606 be the 12/31/03
value of only the old traditional IRA, that includes
non-deductible contributions, or should line 6 also include
the value of other IRA that has no non-deductible
contributions ?
All IRA's, regardless of nature of contributions.

Cheer$,
Harlan Lunsford, EA n LA
 
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A

A.G. Kalman

june said:
In 2003 I started to receive 701/2 distributions from a old
traditional IRA that includes non-deductible contributions.
I also started to receive distributions from a traditional
IRA that was a rollover from an employee savings plan. Thus
this IRA has zero non-deductible contributions.

My question is: should line 6 of form 8606 be the 12/31/03
value of only the old traditional IRA, that includes
non-deductible contributions, or should line 6 also include
the value of other IRA that has no non-deductible
contributions ?
Your RMD for 2003 is based on the balance in ALL of your IRA
accounts as of Dec. 31, 2002. Line 6 of the Form 8606 asks
you to enter your total balance in ALL of your IRA accounts
as of Dec. 31, 2003.

Your cost basis ratio is determined by dividing Line 5 (your
cost basis) by Line 10 (12/31/03 balance plus the 2003
distributions). This ratio is then used to determine how
much of your 2003 distributions is not taxed.
 
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