mouln[at]yahoo.com wrote:

- quote -

The rules are not what is relevant. What is relevant is
whether you made a contribution and did not take a deduction
and you filed the 8606 for that tax year. The last 8606 you
filed would contain your cost basis that you would use on
any 8606 to determine the taxable amount of any
distribution.

If you have made any nondeductible contributions in the past
for which you did not file the 8606, I recommend that you
now file those missing documents. It is unlikely the IRS
would assess any penalty for filing those documents now.
You complete an 8606 for each relevant tax year, sign it and
send it to the same IRS center you use for tax returns.

--
Alan
http://taxtopics.net

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Form 8606 is supposed to be filed each year in which
nondeductible contributions are made to an IRA. The 8606
keeps track of the nondeductible contributions so that when
you start taking distributions, only the deductible
contributions and the gains are taxed. You don't want to
pay taxes on the nondeductible contributions - you've
already been there and done that.

It may be necessary for you to go back all 23 years and
develop an 8606 for each year there was a nondeductible
contribution, otherwise you may have to pay tax on
everything. The IRS can assess a penalty for not filing
8606s. See IRS Pub 590.

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mouln[at]yahoo.com wrote:

- quote -

If your AGI is above a certain threshhold (which depends on
your filing status) and you were covered by a qualified
retirement plan at work, deductibility of your IRA
contributions was phased out. You should have filed an 8606
in any years that you met those conditions. One of the
entries on this form is the amount of non-deductible
contributions from previous years, so it keeps a running
total.

When you start making withdrawals, the taxes on the
withdrawals are pro-rated based on your percentage of
non-deductible contributions. You use form 8606 to
calculate the tax.

--
Barry Margolin, barmar[at]alum.mit.edu
Arlington, MA

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I have had a regular IRA (non Roth)for 23 years.
I am planning to make withdrawals and understand that some
of my past yearly contributions were deductible, and some
were not deductible when an 8606 had to be filed for that
year.

What are the IRS rules regarding under what conditions past
year contributions were deductible and when you had to choose
to file an 8606 for a non deductible contributions. How does
this figure into how IRA withdrawals are taxed??

Thanks for your help!

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