My first form 8606 and definition of total conversions to ROTH


L

lurker

Situation...
Age 64.
I have no wages since 2002.
I have a ROTH opened in 2000.
I took qualified distributions from it in 2005.

I have another ROTH at Fidelity opened November 2004 with a conversion of 100% of a 401K from a different employer.
I executed a conversion from my employer 401K of 1/3 the total value.

Summary...
I have two ROTHs in two places.
All ROTH funding is via conversion. Never were there any wages contributions.

My question:
Yes, I am reading the instructions, but I am unclear on a "definition."

In the spirit of From 8606, does the definition of "SEP, or Simple IRA" include an employer 401K?

Specifically, does the conversion of part of my 401K to a ROTH in a different company satisfy the definition discussed
in line 6?
 
Ad

Advertisements

P

Phil Marti

lurker said:
Age 64.
I have no wages since 2002.
I have a ROTH opened in 2000.
I took qualified distributions from it in 2005.
Because you first funded a Roth in 2000, and you're over 59 1/2, all
distributions from any Roth account will be "qualified."
I have another ROTH at Fidelity opened November 2004 with a conversion of
100% of a 401K from a different employer.
That was impossible in 2004. You would have had to go from the 401(k) to a
traditional IRA, then convert to Roth. Is that what happened?
I executed a conversion from my employer 401K of 1/3 the total value.
This sounds to me like you have a traditional IRA holding the rest of the
401(k). Is that right?
Summary...
I have two ROTHs in two places.
All ROTH funding is via conversion. Never were there any wages
contributions.

My question:
Yes, I am reading the instructions, but I am unclear on a "definition."

In the spirit of From 8606, does the definition of "SEP, or Simple IRA"
include an employer 401K?

Specifically, does the conversion of part of my 401K to a ROTH in a
different company satisfy the definition discussed in line 6?
No, but your question doesn't make any sense. Why are you on line 6? Part
I of the 8606 applies only if you have after-tax money in a traditional IRA,
SEP or SIMPLE. From what you've said, I don't see how any after-tax money
could have gotten into your traditional IRA.

You might also tell us what happened in 2006 that's causing you to file the
8606.
 
L

lurker

Phil said:
Because you first funded a Roth in 2000, and you're over 59 1/2, all
distributions from any Roth account will be "qualified."
Wow!
That is really helpful. In all the reading I have done, I completely missed that.
That was impossible in 2004. You would have had to go from the 401(k) to a
traditional IRA, then convert to Roth. Is that what happened?
Yes, it went through the rollover IRA and taxes were withheld.
This sounds to me like you have a traditional IRA holding the rest of the
401(k). Is that right?
I do not had a traditional IRA anywhere. All I have is the 401K and two Roths. I used to have another 401K but it was
the first one I rolled over (converted).
No, but your question doesn't make any sense. Why are you on line 6? Part
I of the 8606 applies only if you have after-tax money in a traditional IRA,
SEP or SIMPLE. From what you've said, I don't see how any after-tax money
could have gotten into your traditional IRA.

You might also tell us what happened in 2006 that's causing you to file the
8606.
The problem got my attention when I received a 1099-r for the $2000 disbursement with box 2b checked. That box being
checked caused the tax program to treat the $2000 from the Roth to be considered as taxable income. That got my
attention and I am trying to fix that.
 
L

lurker

Phil said:
Because you first funded a Roth in 2000, and you're over 59 1/2, all
distributions from any Roth account will be "qualified."
[ CLIP]

Regarding the comment that tells me that once one is "qualified" on a ROTH, the other ROTHS become qualified...

Can I get a reference on this? My bank doesn't know about it, and none of my other reference sources know about it. It
makes sense, but I have missed it in P590 if it is there.

Thanks.
 
Ad

Advertisements

P

Phil Marti

lurker said:
Because you first funded a Roth in 2000, and you're over 59 1/2, all
distributions from any Roth account will be "qualified."
[ CLIP]

Regarding the comment that tells me that once one is "qualified" on a
ROTH, the other ROTHS become qualified...

Can I get a reference on this? My bank doesn't know about it, and none of
my other reference sources know about it. It makes sense, but I have
missed it in P590 if it is there.
The reference is section 408A of the Internal Revenue Code. The Pub 590
reference is bullet 1 of the section "What Are Qualified Distributions?" on
page 60.

If the bank wants to say that a conversion is not a contribution, refer them
to the Code, which calls conversions "rollover contributions."
 

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Similar Threads

My first form 8606 and line 6 definitions 0
USA Roth Conversion and Form 8606 Line 6 Instructions 1
Form 8606 8
Form 8606 again 5
Roth conversion 1
Roth Conversions 3
ROTH CONVERSION 2
Roth Conversion 1

Top