Will an Inherited IRA (with no basis) impact my Form 8606 for my own IRAs?

[dmertz]

At least with a QCD there would be a "QCD" notation on line 4b to give some clue.

[sandy4042]

True.  Too bad there isn't something similar for inherited IRA's with a basis.  The 1099-R issued for IRAs shows the gross distribution and then has the "taxable amount not determined" box checked which leaves it to the taxpayer to determine it.  I'm surprised that the IRS and Turbotax and other tax prep companies haven't gotten together and provided an e-file avenue for the 8606 for an inherited IRA.  Maybe it's an uncommon situation.  I won't be facing it, but my children may.

[dmertz]

Because basis applies to a particular participant's IRAs in aggregate, IRA custodians have no way to know if there is basis associated with any particular distribution; it's impossible to put any IRA basis information on a Form 1099-R.  That's why for any regular distribution from any IRA box 2b Taxable amount determined is required to be marked on the Form 1099-R.

[sandy4042]

I can see that even in a simple scenario without multiple IRAs and multiple custodians: my spouse's traditional IRA (he only has one).  He's rolled over 401K plans into it as he's had different employers and he could have had a basis in these contributions.  Also, he's had Roth conversions which used up some of the basis.  It would be a bit much for Fidelity or another custodian to track these.  When the IRA was first started though, he did get a statement from Fidelity showing the initial basis which they got from his employer plan.

ETA:  I can see in the situation with multiple IRAs (aggregate), the custodian only knows what you took out of their particular holding.  They don't know the what you possible took out of other IRAs or the basis in those as well.  

[sandy4042]

@sg14d Did you choose not rolling over your spouse's IRA to your own IRA for a particular reason?  IF my spouse pre-deceases me (he's the one with the basis in his IRA and the need for Form 8606) I thought I'd just roll his IRA into mine.  Then whenever I took a distribution, I would file a Form 8606 to use his basis up.  I'd be able to subtract (his basis/sum of my IRA balances x IRA distribution) from the distribution amount to be taxed.

I don't have a basis in my own IRA, but if I did, I would simply add our bases together (my spouse's and my own) when filling out Form 8606.