There are two different scenarios where you would be asked this question and let me know if you fall within these two instances.
- The most common reason that the FMV affects your tax liability is when you have made a distribution or Roth conversion from a traditional IRA and you have basis in nondeductible traditional IRA contributions shown on Form 8606. Your year-end balance affects the taxable and nontaxable proportions of the distribution; a higher year-end balance means that more of your distribution is taxable.
- Did you make an excess contribution to your traditional IRA? There is 6% penalty that is assessed on the excess of your year-end balance.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
