Discussion:Roth and Traditional IRA Basis
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Discussion Forum Index --> Tax Questions --> Roth and Traditional IRA Basis
Www.cpa1.biz (talk|edits) said: | 26 February 2007 |
| Almanacers,
Do you all keep the basis of IRAs on your client's tax return or do you just diregard since they can get this information from their investment house or bank at any time? | |
Chautauqua (talk|edits) said: | 26 February 2007 |
| WWW: How can the investment house or bank possibly know the basis of a traditional IRA? A traditional IRA can be composed of both deductible and non-deductible IRA contributions. | |
Www.cpa1.biz (talk|edits) said: | 26 February 2007 |
| Ok,
You are right? Being that said, if the traditional IRA was nondeductible because the TP made too much, does that effect anything when they get their distribution? Is the nondeductible basis amount non taxable when distributed at the required age? If this makes no difference, then it would be okay and like I said, the person can just get their basis from their investment house. | |
| 26 February 2007 | |
| Keep the basis of anything you can get your hands on... IRAs, stocks, mutual funds, real estate, etc. It will make your life a lot easier and make your services much more valuable to your clients. Basis in most investments usually does not get transferred from one broker to another. Mutual funds are the worst. | |
Www.cpa1.biz (talk|edits) said: | 26 February 2007 |
| Ya,
this can get ugly. Do you use a spread sheet or your tax software to keep your basis updated? | |
| 26 February 2007 | |
| Each distribution partially taxable when you have IRA basis. Past Forms 8606 will help. | |
| 26 February 2007 | |
| If you just save the buys each year (usually from the Y/E brokers statemnets) you'll have the info when you sell. | |
Chautauqua (talk|edits) said: | 26 February 2007 |
| WWW: Absolutely if a taxpayer takes a distribution from a traditional IRA that included non-deductible contributions, a portion of the distribution is non-taxable until the basis (non-deductible contributions) has been recovered. | |
Chautauqua (talk|edits) said: | 26 February 2007 |
| WWW: I will repeat. A trustee of an IRA cannot (repeat: CANNOT!!!) know how much of a contribution to the IRA is deductible or non-deductible. I consider non-deductible IRAs to be a vile pox. | |
Www.cpa1.biz (talk|edits) said: | 26 February 2007 |
| Sounds good Chautauqua,
Can you tell me how you were keeping track of your basis for your clients. Thanks, | |
Chautauqua (talk|edits) said: | 26 February 2007 |
| WWW: It is one of the questions in my annual questionnaire ("Have you or your spouse ever made a non-deductible contribution to an IRA other than a Roth IRA or Coverdell IRA?"). By far the majority of taxpayers have not made such contributions, or have forgotten that they did. I tell the taxpayer to keep track of the amount until the day they start distributions. I will also put the amount on Form 8606 for future reference. | |
| February 26, 2007 | |
| Brian - My software keeps track of the IRA contributions in the past that were non-deductible. This amount is entered on Form 8606 by the software. I include a copy of Form 8606 with the client's copy when there is an amount listed on that form (in case I die, retire, or if they change preparers). That's all you need to do. This amount will be needed when they start drawing from their IRA account, as Chautauqua explained above. | |
