dumbstruck wrote:
- quote -

IRS Publication 552 suggests keeping copies of all Forms 5498, 1099-R,
and 8606 until all distributions are made from your IRA, and gives time
periods for other records:
http://www.irs.gov/publications/p552/index.html

A very obscure reason to keep IRA transaction records would be to
contest a wash-sale allegation (stock sold in taxable account, loss
claimed, but repurchased in IRA within the 30-day wash sale period). How
that scenario would come up, I can't imagine, but it's possible. And
that retention period could be "forever" if the loss you improperly
claimed resulted in a 25% or greater understatement of your tax owed
that year.

In this day and age, I believe it's not worth the time figuring out what
to keep and how long. Keep it all, forever...scanned to a PDF or other
standard format, and stored offsite using one of the many free or nearly
free secure online-backup services. No concerns over PC changes, cracked
CDs, or a flood in the house. And if storage is free...it's not even
worth your time to delete the stuff you probably won't need.

-Tad

Rich Carreiro <rlc-news[at]rlcarr.com> writes:

- quote -

Quite right. Non-qualified distributions of earnings may be
taxed as ordinary income - and may be subject to the early
withdrawal penalty. (p590 actually has an example where the
beneficiaries pay income tax on the earnings but no early
penalty applies).

Thanks for the quick correction.



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Typically any bookkeeping errors are in favor of the IRS,
because the presumption is you've never
paid income taxes on the holdings of an IRA unless
its a Roth. Thats why you need to keep the 8606
current.

BreadWithSpam[at]fractious.net writes:

- quote -

I don't believe that's correct. I'm pretty sure a non-qualified
distribution of earnings from a Roth IRA is subject to both
income tax and the early withdrawal penalty tax.

--
Rich Carreiro rlc-news[at]rlcarr.com

dumbstruck <dumbstruc[at]gmail.com> writes:
- quote -

If you never made non-deductible contributions, then you
never filed an 8606, and your basis is, as you said, 0.

- quote -

Yes.

- quote -

You do want to track the conversion basis separately from
the contribution basis in the Roth IRA because the IRS
treats them differently with respect to when you can pull
them out. Contributions may be taken out at any time and
without penalty. Conversion amounts, when taken out, are
actually treated differently, too. It can get a little
messy, but there's actually an order that specifies which
portion of your Roth IRA assets come out when you take a
distribution. There are four "sources" of assets in the
Roth IRA and distributions are considered to come from
them in the following order:
(a) regular contributions
(b) taxable traditional IRA conversions
(c) nontaxable traditional IRA conversions
(this is the portion of your traditional IRA
which was non-deductible in the first place)
(d) earnings

If you take non-qualified distributions (ie. before
you are 59.5, etc), the following applies to these:

(a) Distributions of regular constributions are always
tax and penalty free.

(b) Distributions of taxable conversions are always
tax-free (you paid taxes when you converted them),
but they may be subject to a penalty if pull them
out after less than 5 yrs.

(c) Distributions of nontaxable conversions are always
tax and penalty free.

(d) Distributions of earnings are always tax-free, but
penalties may apply.

So in order to distinguish between (b) and (c) - you
will still need to know the basis numbers from your
8606 that the custodians do not have.


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On Jan 11, 8:06*am, BreadWithS...[at]fractious.net wrote:
- quote -

OK, that's a pretty elegant system which sounds easy on the
accounting.

I gather a traditional IRA frozen in 1986 will have a basis of 0,
regardless of transaction types (due to only deductable contribs
allowed before 1987).

Same for a 401k rollover IRA; all distributions will be taxable since
contributions weren't originally taxed.

A Roth conversion IRA will have a basis = it's value at time of
conversion (the only transaction needing to be saved in all these).

Reggie wrote:

- quote -

For saving long term records this may not be ideal, either. Both
formats and media readers tend to disappear over time. I currently have
a hard time reading my PC Write files on 5.25" floppies. You can just
forget the files I have on cassette tape.

-Will

william dot trice at ngc dot com

"JoeTaxpayer" <JoeTaxpayer[at]comcast.net> wrote in message
news:gkcv7b$bim$1[at]news.motzarella.org...
- quote -

and who knows what changes may be made to the IRA laws that might make
having those records handy someday.

can you get them in electronic format, and just save the soft copies? can
you scan them in yourself?

dumbstruck <dumbstruc[at]gmail.com> writes:

- quote -

Your IRA custodian (and therefore the transactions records
generated by it) does not know what portion of your
traditional IRA was deductible or not. You track and
report that every year when you file your f8606 with
your federal taxes.

What your IRA custodian does know, though, is exactly
how much you contributed each year. And that gets reported
back to you each year in a form 5498, which list all your
annual contributions as well as what the portfolio's
value was on Dec 31, which may be used for computing RMDs
and such. That form is sent to both you and the IRS.

- quote -

You custodian has no way of knowing what you deducted or
didn't deduct on your taxes.

- quote -

Same information is reported on that 5498 - Roth, SIMPLE and
SEP IRA contributions are all listed. It also shows Roth
conversions and recharacterizations.

Again, deductibility (and therefore basis) is not reported
or tracked there. That's up to you and your 8606.

I'd keep the year-end summaries (most brokerages and
custodians send one, in addition to monthly or quarterly
statements), and of course the 8606s and 5498s. The
year-end summaries should list all the individual
transactions, so you won't need the individual transaction
confirmations because they'd be redundant.

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dumbstruck wrote:
- quote -

You can demand what you wish, but how would the custodian know what you
did on your taxes? An IRA deposit made during the year may only be
classified as deductible (for sure) at tax time, right? As Dave replied,
you track this yourself via 8606.

Now, on the other hand, I am still getting legal notices of actions
against companies for wrong doing back in the late 90's. Having those
statements to provide proof of ownership was instrumental to recovery.
If you have multiple accounts, I don't know how happy the broker will be
to answer "so when did I buy and then sell XYZ corp back 10 years ago"?

On Jan 10, 10:22*pm, dumbstruck <dumbst...[at]gmail.com> wrote:
- quote -

There is very little value in keeping old IRA records, except the last
form 8606 that you filed with your federal income tax return. Every
year that you made a non-deductible traditional IRA contribution, you
(should have) filed a form 8606, on which you added the non-deductible
contribution to the total of your previous non-deductible
contributions, giving an amount called the "basis" of your IRA. That
basis is the only thing you need to know when you take distributions
from your IRA, and you will file an 8606 each year that you take a
distribution, on which you will calculate the amount of the
distribution that is not taxable, as well as your new basis.

There may be some benefit in keeping records of your first Roth IRA
contribution, since, if I recall correctly, distributions taken within
five years of that origination date are not tax-free.

Dave

Can a hay-bale of old IRA transaction records be thrown away? This is
across decades including rule changes, transfers of custodians,
rollover and sometimes Roth conversions. Could there ultimately be a
dispute about which portion is taxable that might require old
yellowing statements?

Traditional IRA - is the key issue what contributions were not tax
deducted vs the rest (deducted contributions and gains, which are
taxable)? Seems to me there was a major deductability change early on
in 1986. Should you demand the breakdown from your current custodian
of the underlying categories, so if it agrees you can throw away
records?

Rollover IRA, Roth IRA - any different categories that impact later
taxation of distributions? Can't even remember if the 401k source of
rollover was originally deducted. thanks