@dbryda23 wrote:
Thank you very much for the detail and reply. That was the assumption I was under that, regardless of age, you could take your contributions at any time untaxed. I was presuming that a 1099-R form would be sent by the custodian and I would key that info in and it would take care of that and the 8606 without tax for me? Thanks
-Dan
Form 8606 is something that you generate as part of your tax return if you make non-deductible contributions or withdrawals to a traditional IRA. (The IRS expects contributions to a traditional IRA will be tax-deductible, so if you choose not to deduct them, your tax return will include a form 8606 documenting that fact. You should keep a copy of this form for the rest of your life--it is an exception to the general rule that you can discard tax papers after 3 or 7 years.)
When you withdraw from a Roth IRA, you will get a 1099-R that you enter on your tax return. By law, you always withdraw contributions first, conversion amounts second, and earnings last. You will need to tell Turbotax whether your withdrawal is contributions, conversions or earnings, using your own records. The IRS will double-check your work and may send you a tax bill if you get it wrong, but you have the primary responsibility to keep those records.
Form 8606 is only needed if part of your Roth IRA withdrawal includes money that was from a conversion of a regular IRA that contained non-deductible contributions (a "back door" Roth conversion). If you never made non-deductible IRA contributions, you will not have a form 8606 in your tax history and you can ignore that part of the instructions. If some of your Roth money is from a backdoor conversion, you may need that information to determine the taxability of the Roth IRA withdrawal.
