1099 R in 2016 with a balance in box 2A and box 7G

[Ilovetotravel]

My husband kept 0 records of his pension direct rollover into an E*trade Ira account. He believes it went into a traditional IRA fund, but from my research, because our 1099 R has a taxable balance in box 2A and box 7 shows G, he rolled his pension into a Roth IRA and we paid taxes on the rollover amount. I used turbo tax that year but have no record of a form 8606 for that year. This is re-surfacing because we needed to recharacterize our Roth contributions to a traditional for 2025 due to income limits. I have no idea how to proceed with our IRA basis , please help

[AmyC]

Let's break this down:

• The code G rollover into traditional is not taxable so your taxable box 2 and ROTH conclusion are correct. 
• The form 8606 keeps track of your nondeductible contributions. 
  • See Who Must File form 8606. If you should have filed and did not, you should file the form for each year separately. I had to go back over 30 years with one client. The sooner you get back on track, the better. 
  • See About Form 8606, Nondeductible IRAs.
• The basis can be tracked:
  • first step - your 1099-R shows a taxable amount - if that really is in a traditional IRA -some basis established
  • Form 5498 -the broker sends when you make contributions and rollovers, see What Is IRS Form 5498: IRA Contributions Information?

I want to urge you to create a financial notebook that is kept separate from your tax return. Keep it safe and each year, add your year-end statements from all your financial accounts plus a copy of your W2’s, your  carryover information, and proof of your basis in your various investments. You must keep tax records  from the time you purchase until sold/ loss used plus 3 years. It is very easy to lose track of disallowed losses, carryforwards,  and basis. This can be a digital or paper notebook.

[dmertz]

Nothing about the rollover from the pension plan to the Roth IRA was reportable on Form 8606 that year.  It created no basis in nondeductible traditional IRA contributions because it was rolled over to a Roth IRA not to a traditional IRA.  Because this taxable rollover was from a pension plan not from a traditional IRA, it was not reportable on Form 8606 Part II.  Part II is used only when the funds came from a traditional IRA not from a pension plan.  Still, the rollover from the pension plan to the Roth IRA does create conversion basis in the Roth IRA the same as a Roth conversion from a traditional IRA would.

The past rollover from the pension plan has nothing to do with the Roth conversion that you need to recharacterize or the recharacterization of that contribution.  Still, it would be good to keep track of the conversion basis in case a Roth IRA distribution need to be made before age 59½.  Since it has been more than 5 years since the rollover from the pension plan, the amount rolled over to the Roth IRA that year is now equivalent to Roth IRA contribution basis.