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reduced by your deduction for contributions made on your
behalf to retirement plans and the deductible part of your
self-employment tax.
•
Alimony and separate maintenance pursuant to a
divorce or separation agreement entered into before
January 1, 2019, unless that agreement was changed
after December 31, 2018, to expressly provide that
alimony received isn't included in the recipient's income.
•
Certain non-tuition fellowship and stipend payments.
For details, see Pub. 590-A.
See What Is Compensation? under Who Can Open a
Traditional IRA? in chapter 1 of Pub. 590-A for details.
Recharacterizations
Generally, you can recharacterize (correct) an IRA
contribution by making a trustee-to-trustee transfer from
one IRA to another type of IRA. Trustee-to-trustee
transfers are made directly between financial institutions
or within the same financial institution. You must generally
make the transfer by the due date of your return (including
extensions) and reflect it on your return. However, if you
timely filed your return without making the transfer, you
can make the transfer within 6 months of the due date of
your return, excluding extensions. If necessary, file an
amended return reflecting the transfer (see
Amending
Form 8606, later). Enter “Filed pursuant to section
301.9100-2” on the amended return.
No recharacterizations of conversions made in 2018
or later. A conversion of a traditional IRA to a Roth IRA,
and a rollover from any other eligible retirement plan to a
Roth IRA, made in tax years beginning after December
31, 2017, cannot be recharacterized as having been made
to a traditional IRA.
Reporting recharacterizations. Treat any
recharacterized IRA contribution as though the amount of
the contribution was originally contributed to the second
IRA, not the first IRA. For the recharacterization, you must
transfer the amount of the original contribution plus any
related earnings or less any related loss. In most cases,
your IRA trustee or custodian figures the amount of the
related earnings you must transfer. If you need to figure
the related earnings, see
How Do You Recharacterize a
Contribution? in chapter 1 of Pub. 590-A. Treat any
earnings or loss that occurred in the first IRA as having
occurred in the second IRA. You can’t deduct any loss that
occurred while the funds were in the first IRA. Also, you
can’t take a deduction for a contribution to a traditional
IRA if you later recharacterize the amount. The following
discussion explains how to report the two different types
of recharacterizations, including the statement that you
must attach to your return explaining the
recharacterization.
1. You made a contribution to a traditional IRA and
later recharacterized part or all of it in a trustee-to-trustee
transfer to a Roth IRA. If you recharacterized only part of
the contribution, report the nondeductible traditional IRA
portion of the remaining contribution, if any, on Form 8606,
Part I. If you recharacterized the entire contribution, don’t
report the contribution on Form 8606. In either case,
attach a statement to your return explaining the
recharacterization. If the recharacterization occurred in
2023, include the amount transferred from the traditional
IRA on 2023 Form 1040, 1040-SR, or 1040-NR, line 4a. If
the recharacterization occurred in 2024, report the amount
transferred only in the attached statement, and not on
your 2023 or 2024 tax return. See Example next.
Example. You are single, covered by an employer
retirement plan, and you contributed $4,000 to a new
traditional IRA on May 26, 2023. On February 23, 2024,
you determine that your 2023 modified AGI will limit your
traditional IRA deduction to $1,000. The value of your
traditional IRA on that date is $4,400. On the same date,
you recharacterize $3,000 of the traditional IRA
contribution as a Roth IRA contribution, and have $3,300
($3,000 contribution plus $300 related earnings)
transferred from your traditional IRA to a Roth IRA in a
trustee-to-trustee transfer. You deduct the $1,000
traditional IRA contribution on your 2023 Form 1040. You
don’t file a 2023 Form 8606. You attach a statement to
your 2023 return explaining the recharacterization. The
statement indicates that you contributed $4,000 to a
traditional IRA on May 26, 2023; recharacterized $3,000
of that contribution on February 23, 2024, by transferring
$3,000 plus $300 of related earnings from your traditional
IRA to a Roth IRA in a trustee-to-trustee transfer; and
deducted the remaining traditional IRA contribution of
$1,000 on your 2023 Form 1040. You don’t report the
$3,300 distribution from your traditional IRA on your 2023
Form 1040 because the distribution occurred in 2024. You
don’t report the distribution on your 2024 Form 1040
because the recharacterization related to 2023 and was
explained in an attachment to your 2023 return.
2. You made a contribution to a Roth IRA and later
recharacterized part or all of it in a trustee-to-trustee
transfer to a traditional IRA. Report the nondeductible
traditional IRA portion of the recharacterized contribution,
if any, on Form 8606, Part I. Don’t report the Roth IRA
contribution (whether or not you recharacterized all or part
of it) on Form 8606. Attach a statement to your return
explaining the recharacterization. If the recharacterization
occurred in 2023, include the amount transferred from the
Roth IRA on your 2023 Form 1040, 1040-SR, or 1040-NR,
line 4a. If the recharacterization occurred in 2024, report
the amount transferred only in the attached statement,
and not on your 2023 or 2024 tax return. See
Example
next.
Example. You are single, covered by an employer
retirement plan, and you contributed $4,000 to a new Roth
IRA on June 16, 2023. On December 29, 2023, you
determine that your 2023 modified AGI will allow a full
traditional IRA deduction. On that same date, you
recharacterize the Roth IRA contribution as a traditional
IRA contribution and have $4,200, the balance in the Roth
IRA account ($4,000 contribution plus $200 related
earnings), transferred from your Roth IRA to a traditional
IRA in a trustee-to-trustee transfer. You deduct the $4,000
traditional IRA contribution on your 2023 Form 1040. You
don’t file a Form 8606. You attach a statement to your
return explaining the recharacterization. The statement
indicates that you contributed $4,000 to a new Roth IRA
on June 16, 2023; recharacterized that contribution on
December 29, 2023, by transferring $4,200, the balance in
the Roth IRA, to a traditional IRA in a trustee-to-trustee
transfer; and deducted the traditional IRA contribution of
$4,000 on your 2023 Form 1040. You include the $4,200
Instructions for Form 8606 (2023)
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