Failure to file Form 8606 30 years ago....

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retiringwhen
Posts: 68
Joined: Sat Jul 08, 2017 10:09 am
Location: New Jersey, USA

Failure to file Form 8606 30 years ago....

Post by retiringwhen » Mon Nov 13, 2017 10:01 am

So, long story short, my wife transferred a pre-tax traditional IRA over to Vanguard in 1989 that was less than $2,000, but Vanguard required a minimum opening balance of $2,000, So she kicked in $300 at the time of the transfer. The transfer was executed as a distribution then contribution (1009-R and 5948 forms and reported appropriately on our tax return.) I failed to file a Form 8606 for after-tax contributions or report the $300 on the 1040 as a pre-tax contribution on our 1989 taxes (we may not have qualified, cannot remember anymore).

Lo, these many years later, I am trying to get ready for do a Roth conversion of this IRA.

Do I just ignore this and assume I should treat the IRA balance as all pre-tax contributions?

It would seem like the path of least resistance (and most advantageous to the IRS), but I just want to be sure there are no consequences I haven't considered. This account is 6 digits now after a later rollover that was all pre-tax along with decades of growth, so the $300 is literally a rounding error in the account.

As an interesting aside, somehow between Shearson and Vanguard the 1099-R and the 5948 are off by exactly $50 with no record on why (Shearson 1099-R was for $1731.33 and the Vanguard deposit & 5948 was for $1781.33) That year created some interested records for me to sort out after a long passage of time......

texaspapas
Posts: 96
Joined: Tue Jul 15, 2014 7:03 pm

Re: Failure to file Form 8606 30 years ago....

Post by texaspapas » Mon Nov 13, 2017 3:08 pm

Sorry I don't know the answer, but you might try the Fairmark forum for a question like this if you don't get any answers here, their focus is on tax-specific topics.

DrGoogle2017
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Re: Failure to file Form 8606 30 years ago....

Post by DrGoogle2017 » Mon Nov 13, 2017 4:04 pm

I would try to resubmit a 8606 for that year with a note to say that you forgot. How did you find out after all these years.

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WoodSpinner
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Re: Failure to file Form 8606 30 years ago....

Post by WoodSpinner » Mon Nov 13, 2017 4:18 pm

retiringwhen wrote:
Mon Nov 13, 2017 10:01 am
So, long story short, my wife transferred a pre-tax traditional IRA over to Vanguard in 1989 that was less than $2,000, but Vanguard required a minimum opening balance of $2,000, So she kicked in $300 at the time of the transfer. The transfer was executed as a distribution then contribution (1009-R and 5948 forms and reported appropriately on our tax return.) I failed to file a Form 8606 for after-tax contributions or report the $300 on the 1040 as a pre-tax contribution on our 1989 taxes (we may not have qualified, cannot remember anymore).

Lo, these many years later, I am trying to get ready for do a Roth conversion of this IRA.

Do I just ignore this and assume I should treat the IRA balance as all pre-tax contributions?

It would seem like the path of least resistance (and most advantageous to the IRS), but I just want to be sure there are no consequences I haven't considered. This account is 6 digits now after a later rollover that was all pre-tax along with decades of growth, so the $300 is literally a rounding error in the account.

As an interesting aside, somehow between Shearson and Vanguard the 1099-R and the 5948 are off by exactly $50 with no record on why (Shearson 1099-R was for $1731.33 and the Vanguard deposit & 5948 was for $1781.33) That year created some interested records for me to sort out after a long passage of time......
That is my plan .... its been so long and its such a small percent of the overall portfolio that I decided to just ignore it and assume its all pre-tax. Here is a post that discusses my situation ...

:annoyed

retiredjg
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Re: Failure to file Form 8606 30 years ago....

Post by retiredjg » Mon Nov 13, 2017 4:32 pm

retiringwhen wrote:
Mon Nov 13, 2017 10:01 am
Do I just ignore this and assume I should treat the IRA balance as all pre-tax contributions?
Yes. Speaking from experience, the IRS will not even notice or care that you are paying taxes on that $300 again.

You could, if you prefer, send them a 1989 Form 8606. They are likely to accept it, but it hardly seems worth the trouble of pro-rating every conversion against that $300 each time you do it.... until all her traditional IRAs are completely empty.

retiringwhen
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Location: New Jersey, USA

Re: Failure to file Form 8606 30 years ago....

Post by retiringwhen » Mon Nov 13, 2017 5:17 pm

retiredjg wrote:
Mon Nov 13, 2017 4:32 pm
retiringwhen wrote:
Mon Nov 13, 2017 10:01 am
Do I just ignore this and assume I should treat the IRA balance as all pre-tax contributions?
Yes. Speaking from experience, the IRS will not even notice or care that you are paying taxes on that $300 again.

You could, if you prefer, send them a 1989 Form 8606. They are likely to accept it, but it hardly seems worth the trouble of pro-rating every conversion against that $300 each time you do it.... until all her traditional IRAs are completely empty.
thanks retireddjg and WoodSpinner, I believe the path of least resistance is to just ignore it and eat the ~$75 in double taxation AND reduce my paperwork for the next 20 years....

Thanks for the feedback.

PS: For the guy who asked how I know? Well I don't keep most records for a long time, but I have kept all my tax filing records back almost to my teenage years (although, I have seemed to misplace my W-2s and 1040s from my part time jobs in the 1970s.) I have the original forms from Vanguard, Shearson and the 1040s I submitted back in the day. (and I have kept year-end statements for all the years of the IRA as well except for 2001 for some unknown reason....) This is a lesson in probably why I should keep more records. I have been getting a bit lazier with electronic records. They are frankly harder to find.

Good Listener
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Re: Failure to file Form 8606 30 years ago....

Post by Good Listener » Mon Nov 13, 2017 7:09 pm

This is a no brainer for me. Treat it all as pre tax..

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