Form 8606 for Rollover IRA Roth Conversion

[GVZ]

With apologies for a lengthy question - asking for help.

I have a traditional non-deductible IRA, to which I contribute regularly.  I receive Form 5498 for this IRA every year; I haven’t yet received this form for Tax Year 2024 (it will not be sent until May 2025), but I know the IRA value at the end of 2024 and the cost basis (essentially, the totality of my contributions – none of them were ever deducted due to high income).

I also have a Rollover IRA which exists for the sole purpose of rolling over my 401(k) plans when I change jobs. In 2024, I rolled over some of my 401(k) into this Rollover IRA (direct rollover, not a taxable event). I have NEVER received a Form 5498 for this account, but I know its end of year value, and assume that its cost basis is $0 since it has only rollover finds + reinvested dividends.

In 2024 I created a Roth IRA account and converted some of the Rollover IRA to Roth. Now I’m working on Form 8606 in TurboTax, and am not sure how to answer several questions:

1. It asks me what is my IRA cost basis. Should I enter $0 (which I think is the cost basis of the Rollover IRA), or should enter the aggregate of cost basis of the Traditional IRA and Rollover IRA? Am I correct that the cost basis of a Rollover IRA is $0 assuming no other contributions were made – just direct rollovers from 401(k) plans and reinvestments of dividends?
2. It asks me what is the end of year value of the IRA account. Should I enter the value of just the Rollover IRA, or aggregate value of both IRA accounts?
3. How do I make TurboTax aware that I have two IRA accounts? All these years I was receiving just one Form 5498 (for Traditional IRA) and this is what I was entering in TurboTax in Deductions section.

Thank you very much for your help!

[ThomasM125 · Accepted solution]

If you have non-deductible contributions to IRA's in prior years, then you have to enter the aggregate balances of your IRA accounts as requested in TurboTax. One reason for this is so that your Form 8606 is populated properly and to insure the correct treatment of your rollover contributions to the Roth IRA.

You need to enter the non-deductible IRA contribution in the IRA entry screens in the Deductions and Credits section.

You would combine the entries on your Forms 5498 to account for having more that one IRA.

To view your form 1040 and schedule 1 to 3:

1. Choose Tax Tools from your left menu bar in TurboTax Online
2. Choose Tools
3. Choose View Tax Summary
4. See the Preview my 1040 option in the left menu bar and click on it
5. Choose the Back option in the left menu bar when you are done 

[Edited 2/19/25 at 1:52 PM PST]

@GVZ 

[GVZ]

Thanks @ThomasM125 !

Just to make sure I understand correctly:

1) in TurboTax, in the Income section, when I describe the Roth conversion from the Rollover IRA, I specify

- the cost basis of the IRA as $0 because I did not make any contributions to this IRA other than rollovers. The contributions that I made to a different (non-deductible) IRA are not relevant for the Roth conversion event and should not be taken into account.

- the end of year value is the value of this Rollover IRA only; the value of the other IRA account is not relevant for the or the Roth conversion event and should not be taken into account.

2) In the Deductions section, where I describe non-deductible contributions, the cost basis is the total of all cost basis values of all traditional IRAs (i.e., $0 for the Rollover IRA + $XXX for the non-deductible IRA; the Roth IRA should not be included) and the year end value is the total of all traditional IRAs (i.e., $NNN for the Rollover IRA + $MMM for the non-deductible IRA; the Roth IRA should not be included).

Thanks again for your help - much appreciated!

[DanaB27 · Accepted solution]

1) No, when TurboTax asked about your basis, after you entered all your Form 1099-Rs, you will enter the aggregated basis from your traditional IRA and the rollover traditional IRA. The IRS see all traditional IRA's as one account for Form 8606 (exception if you have an inherited IRA, then you need a separate Form 8606).  

No, you must enter the value of all your traditional, SEP, and SIMPLE IRAs on December 31, 2024, in the retirement section. Therefore, you need to add the value of the traditional IRA and rollover IRA together. You can see them on your end of the year statement.

2) Yes, the basis in the Deduction section is the total of all cost basis of all traditional IRAs (i.e., $0 for the Rollover IRA + $XXX for the non-deductible IRA; the Roth IRA should not be included). This basis question and the retirement basis question are the same.

Note, the end year value question during the IRA contribution interview is different from the value question in the retirement section. In the IRA contribution section the value question only comes up when you have an excess contribution. TurboTax will asked on this screen to enter the value of the traditional IRA on December 31, 2024, including contribution made in 2025 for 2024. TurboTax uses this value to calculate the penalty on Form 5329.

@GVZ 

[GVZ]

Thanks @DanaB27 ! I think I am clear now on the Roth conversion part of the question. I will enter the aggregate value of the cost basis of both IRAs ($XXX for non-deductible IRA + $0 for rollover IRA) and aggregate value for the end of year value of both IRAs ($MMM for non-deductible IRA +$NNN for rollover IRA).

For the Deduction section, I'm still a little bit unclear. I haven't made any excess contributions to this (non-deductible) IRA, and never have in the past. Nonetheless, TurbTotax always asks for a) amount for contributions; b) prior year cost basis; and c) end of year value. Am I correct in understanding that for this section I need to enter the cost basis and the end of year amount for this non-deductible IRA only (i.e., disregard the other rollover IRA to which I have never made any contributions other that direct rollovers)?

Thanks again for your help!

[DanaB27]

I'm not sure about all previous years but this year in the IRA contribution section if you get the "Tell Us the Value of All Your Traditional IRA Accounts" screen which states to include contributions made in 2025 for 2024 then this is about an excess contribution and Form 5329. Here you enter the value of all of your traditional IRAs plus any contribution made in 2025 for 2024. Remember, the IRS sees all traditional IRAs as one account.

To clarify, you never got a penalty warning at the end of the traditional IRA contribution interview? If you didn't then you should be good and not have an excess contribution. Please note, you need taxable compensation to make IRA contributions.

If you get the "Tell Us the Value of Your Traditional IRA" screen which states to enter the total value of all traditional, SEP, and SIMPLE IRAs on December 31, 2024, then this is in regards to Form 8606 and this is the same screen as in the retirement section.

Screen in the IRA contribution interview that should only come up if you made an excess contribution for Form 5329:

Screen in regards to Form 8606:

[GVZ]

Thanks @DanaB27 !