Based upon your description, the “rollover”
clause does not apply to you. You should only enter the amount of money that
you withdrew from your IRAs.
Your
wife’s “rollover” account is the brokerage firm’s way of alerting their staff
and the IRS that they have no way of knowing the original basis of the account,
since they have not always been the custodians. Therefore, they do not know if
any of the contributions have already been taxed.
When
line 7 refers to a rollover, they want to know if any of the money you withdrew
this year was rolled over into another qualifying (pre-tax) account. If so,
that money does not count as part of your Required Minimum Distribution (RMD)
and is exempt from tax. Do not include a current year rollover on Line 7.
Instructions
for Form 8606 can be found below.
https://www.irs.gov/pub/irs-pdf/i8606.pdf
