Is a 401k plan considered a "Traditional IRA" for purposes of inclusion on Line 6 of Form 8606?
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Is a 401k plan considered a "Traditional IRA" for purposes of inclusion on Line 6 of Form 8606?

A previous answer from shellsbush180 indicated that the answer to this exact question was "no".  But this implies that a 401(k) is excluded from calculating a RMD.  I that were true, why would anyone convert a (no basis) 401k to an traditional IRA, if the 401(k) was able to grow indefinitely, with no required distributions?

6 Replies
Level 15

Is a 401k plan considered a "Traditional IRA" for purposes of inclusion on Line 6 of Form 8606?

Reasons to move a 401K to an IRA ...

> the former employer requires you to do so
> the IRA has more investment options available
> the 401K has no decent rates of return on any of the menu options
Level 15

Is a 401k plan considered a "Traditional IRA" for purposes of inclusion on Line 6 of Form 8606?

Your information that a 401k has  no required distributions is somewhat mistaken. Both an IRA and a 401k have  RMD requirements beginning at age 70-1/2.
Level 15

Is a 401k plan considered a "Traditional IRA" for purposes of inclusion on Line 6 of Form 8606?

Except, as dmertz pointed out below, there is no 401(k) RMD required if you are still working for the company as long as you are not a 5% or more owner of the company.

If you are not still working for the company then the combined 401(k) and Traditional IRA RMD amounts would be exactally the same total amount as it would be if all the money was in a Traditional IRA.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
Level 15

Is a 401k plan considered a "Traditional IRA" for purposes of inclusion on Line 6 of Form 8606?

No it is not.

Use Form 8606 to report:

  • Nondeductible contributions you made to traditional IRAs;

  • Distributions from traditional, SEP, or SIMPLE IRAs, if you have ever made nondeductible contributions to traditional IRAs;

  • Conversions from traditional, SEP, or SIMPLE IRAs to Roth IRAs; and

  • Distributions from Roth IRAs.

Level 15

Is a 401k plan considered a "Traditional IRA" for purposes of inclusion on Line 6 of Form 8606?

No, a 401k tax deferred account is not entered on a Form 8606 Nondeductible IRAs.  

As stated on the instructions for the form 8606 - https://www.irs.gov/pub/irs-pdf/i8606.pdf

Purpose of Form  

Use Form 8606 to report: 

  • Nondeductible contributions you made to traditional IRAs; 
  • Distributions from traditional, SEP, or SIMPLE IRAs, if you have ever made nondeductible contributions to traditional IRAs; 
  • Conversions from traditional, SEP, or SIMPLE IRAs to Roth IRAs; and 
  • Distributions from Roth IRAs. 

IRS website - https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions#...

What types of retirement plans require minimum distributions?

The RMD rules apply to all employer sponsored retirement plans, including

profit-sharing plans, 401(k) plans, 403(b) plans, and 457(b) plans. The RMD rules also apply to traditional IRAs and IRA-based plans such as SEPs, SARSEPs, and SIMPLE IRAs.

The RMD rules also apply to Roth 401(k) accounts. However, the RMD rules do not apply to Roth IRAs while the owner is alive.

Level 15

Is a 401k plan considered a "Traditional IRA" for purposes of inclusion on Line 6 of Form 8606?

Form 8606 has nothing to do with determining the amount of RMDs.  Form 8606 Part I has only to do with determining the taxable amount of IRA distributions, regardless of the reason for taking a regular IRA distribution, and nothing to do with 401(k) distributions.

For the year that you reach age 70½ and subsequent years, RMDs are required from 401(k) accounts, except if you are still working for the employer and you are not a more-than-5% owner of the company.  An RMD from a 401(k) is required to be satisfied from that 401(k), without regard to any other qualified retirement accounts.  You are required to satisfy any RMD required of the 401(k) before rolling over any other amounts distributed from the 401(k).

Like money in a traditional IRA, RMD requirements make it certain that money in a 401(k) account will eventually be distributed.  Nobody can live and work forever to maintain the still-working exception to RMDs from the 401(k).  Even if the employee dies while still working, the employee's beneficiaries will have to take distributions from the 401(k).

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