back door conversion from tradditional IRAs of mulitple years

[wbic1]

I have a tradditional IRA account at fidelity.  I have contributed $6K every year since 2012 to my tradditional IRA .  I also filed a 5498 for long with my tax filing every year since 2010. 5498 is a tax form stating that my contribution is a non-deductible after-tax contribution.  I was never awared of the back door roth conversion until recently.  My total  contribution on paper is $60K from 10 years of contribution, however, the total is now only $50K due to loss from bad stocking.  I lost $10K of my 10-year accoumulation of IRA contribution from bad stock trading.

If i do the back door roth conversion today,  can i convert all $50K into an Roth IRA account? and how  can the IRS know that $50K is from 10 years of accumulation and that 50K was not from a single year of contribution.

Which tax form is required to this roth tax conversion? is it the 8606?  Thanks

[dmertz]

Form 5498 has nothing to do with reporting whether or not your contribution was nondeductible.  Form 5498 simply reports contributions.  To treat the contributions as nondeductible you were required to file Form 8606 each year that you made a nondeductible traditional IRA contribution and it's Form 8606 on which you'll report the Roth conversion and calculate the taxable amount of the conversion based on your $60,000 of basis in nondeductible traditional IRA contributions and your year-end value in traditional IRAs.

If you failed to file the required Form 8606 each year, you'll need to correct that by filing these forms late.  Line 14 of each year's Form 8606 carries forward to line 2 of the next year's Form 8606.

[wbic1]

Dmertz,

I did submit individual 8606 every year for the last 10 years to the IRS at each tax filing. I used turbo tax to do my tax filing, and turbo tax automatically generated an 8606 each year.  I used the 8606 to report each year contribution as a non-deductible after tax contribution. Since I was not aware of the back door roth conversion, I never used the 8606 to convert my tradditonal IRA monies to a Roth IRA.

i currently have 10 years of accumulation of traddition IRA monies in my tradditional IRA account,and the current total amount of money is less than what I contributed at the beginning due to my bad investing strategy.

Question: can I use one form 8606 (instead of 10 forms) to convert all the traddtional IRA money from the last 10 years of contribution  to my Roth IRA account? 

[macuser_22]

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@wbic1 wrote:

Dmertz,

I did submit individual 8606 every year for the last 10 years to the IRS at each tax filing. I used turbo tax to do my tax filing, and turbo tax automatically generated an 8606 each year.  I used the 8606 to report each year contribution as a non-deductible after tax contribution. Since I was not aware of the back door roth conversion, I never used the 8606 to convert my tradditonal IRA monies to a Roth IRA.

i currently have 10 years of accumulation of traddition IRA monies in my tradditional IRA account,and the current total amount of money is less than what I contributed at the beginning due to my bad investing strategy.

Question: can I use one form 8606 (instead of 10 forms) to convert all the traddtional IRA money from the last 10 years of contribution  to my Roth IRA account? 

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You only use the last filed 8606.   Each filed 8606 should show the prior basis, the additional basis and the total carry forward basis.    Each 8606 replaces the last 8606.

Enter a 1099-R here:

Federal Taxes,
Wages & Income
(I'll choose what I work on - if that screen comes up)
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).

OR Use the "Tools" menu (if online version left side) and then "Search Topics" for "1099-R" which will take you to the same place.

Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type: Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.

[NOTE: When you get to the "Your 1099-R Entries" screen where you can add another 1099-R, use "continue" to keep going as there are additional interview questions after that screen in most cases. You can always return as shown above.]

You will be asked of you had and tracked non-deductible contributions - say yes. The enter the amount from the last filed 8606 form line 14 if it did not transfer. Then enter the total value of any Traditional, SEP and SIMPLE IRA accounts that existed on December 31, 2020.

That will produce a new 8606 form with the taxable amount calculated on lines 6-15 and the remaining carry-forward basis on line 14.

NOTE: If there is an * next to line 15 then 6-15 will be blank and the calculations will be on the "Taxable IRA Distributions worksheet instead.

[dmertz]

"Then enter the total value of any Traditional, SEP and SIMPLE IRA accounts that existed on December 31, 2019."

For a Roth conversion performed in 2020, that should be the amount of any of these IRAs on December 31, 2020, reported on 2020 Form 8606.

[macuser_22]

Thank you - I updated my answer.

[wbic1]

"......You only use the last filed 8606.   Each filed 8606 should show the prior basis, the additional basis and the total carry forward basis.    Each 8606 replaces the last 8606......"

I have been using turbo tax to do my taxes since 2008, go way back, and I do not recall if turbo tax carried the subtotal of the tradditional IRA contribution carry forward or not,  I need to go back and look. However, Earlier this year, i accidentally threw out all the turbotax CDs along with my trash, so i do not know.

I am not sure if i have been doing it correctly or not. I dont recall putting down on my turbotax the subtotal of all tradditional IRA amount carry forward. I think i  just simply put down $6000  on the 8606 form every year since 2010

Did I screw up in reporting the 8606? if i did, what  should I do now?

Thanks very much for  helping

our assistance

[Opus 17]

Form 8606 is cumulative. You only need the form from your 2019 tax return to prepare your 2020 tax return. You should be saving copies of all of your tax returns as PDF files or printed paper copies for at least three years after you file and preferably for six years, regardless of whether you save the software programs.

if you don’t actually have a PDF or a paper copy of your 2019 tax return, you can request a transcript from the IRS that will show the information that was on the form.

https://www.irs.gov/individuals/get-transcript

[Opus 17]

Additionally, your tax returns are not stored in the application files or on the CDs. Your tax returns are stored in separate documents that are usually located in your documents folder and that have a file name like “John Smith 2019.Tax 2019“.  You can have multiple tax documents just like you have multiple word processing documents, and deleting the application does not delete the tax documents. (Although you certainly could have deleted the tax documents as well that’s up to you.)

If you install TurboTax for 2020 on your computer, the first thing it will do when you start the program is look for a 2019 tax file that it can open and import your basic information. This should include the information from form 8606.