Simple IRA to ROTH conversion and form 8606

[moncul]

I've been doing IRA to ROTH conversions over the past few years and just read that form 8606 should be filed when doing this kind of conversion.

We're MFJ and both over 59.5.

This is a fully taxable IRA (there aren't any non-deductible contributions). Eg, if I converted 10k, I'd get a 1099R from the brokerage firm saying that the 10k is fully taxable (distribution code 7). I input this form and TTO computes the taxes accordingly. So everything seems fine in terms of taxes.

But I don't see a form 8606 in my print packet. Is this form really necessary? It does seem superfluous.

Thx.

[dmertz · Accepted solution]

If it's been more than 5 years since the beginning of the year you first made a Roth IRA contribution (or Roth conversion), the details that you are supposed to have provided on Form 8606 Part II are largely irrelevant.  Part II documents the conversion so that you have tracking of the amount of conversion basis in case you were to take a nonqualified distribution fro your Roth IRAs.  The Roth IRA custodian also reports the conversion amounts on Form 5498 from the receiving Roth IRA, another source of this information.  Entered properly into TurboTax, TurboTax would be tracking your conversion basis.

The instructions for Form 8606 say that you are to have filed Form 8606 Part II for any Roth conversion from a traditional IRA, but failing to report the distribution as being a Roth conversion has no effect on determining the taxable amount shown on Form 1040 (as long as you don't mistakenly report the distribution as a nontaxable rollover).

Part II of Form 8606 was entirely necessary before 2010 for the IRS to be able to properly process your tax return because before 2010 eligibility to do a Roth conversion was dependent on MAGI for the purpose.  Without that form, when processing your tax return the IRS would have been unable to identify failed conversions caused by an MAGI that was too high.