2010 401k Rollover

by on February 22, 2012

Today TaxMama® hears from Tom in the TaxQuips Forum with this issue.  “I rolled over a 401k directly to a Roth IRA in 2010.  I received a 1099 for this, but did not fill out an 8606 when I submitted my 2010 return. The plan was to report half of the taxable amount in 2011 and half in 2012.  Do I need to amend my 2010 return or should I just write in the amounts on line 16B of the 2011 Form 1040, and hope they don’t get too excited about it?” 

 

Gee Thomas,

The IRS doesn’t just shrug off a major missing form like that.  

I really, really hate to tell you this. The ONLY way to get the right to defer the taxes on the rollover to 2011 and 2012 was to file that Form 8606 with a TIMELY FILED 2010 tax return.

If you didn’t include that form last year, I don’t believe you can just amend the 2010 tax return and request the privilege now. You can certainly try and see what IRS does.

Put this year’s tax return on extension and wait for IRS to give you a decision after you file the 2010 amended return with the Form 8606. Read chapter 2 of the 2010 IRS Publication 590 for the rules for that 2010 rollover.

I truly hope you are not faced with all the taxes being due in 2010, along with late payment penalties.

And remember, you can find answers to all kinds of questions about Roth Rollovers and other tax issues, free. Where? Where else? At www.TaxMama.com.

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{ 4 comments }

TaxMama February 22, 2012 at 10:32 am

Yup, there you go.
On page 2, there is a signature area with a jurat, allowing you to file this all by itself!
http://www.irs.gov/pub/irs-pdf/f8606.pdf

Personally, Thomas, I would file the whole 1040 and just close the statute of limitations on audit for 2010. That way, 5 years from now, no one can come along and ask what you were living on in 2010.

Hugs
Eva

Thomas Smith February 22, 2012 at 10:17 am

I was told that the 8606 was a stand alone document and that the 2010 1040 would not need to be redone.

TaxMama February 22, 2012 at 10:13 am

AWESOME!
Thanks for letting us know.

You’re right. When it comes to something that EVERYONE tends to do wrong,
IRS has been known the waive all the big penalties and help people survive the procedure.
Good, so file the Form 8606 (did they want the 2010 1040 with the 8606?) – then do your 2011 returns.

I am so glad you’ll only face a $50 fee.

Thanks
Hugs
EVa

Thomas Smith February 22, 2012 at 10:09 am

I wanted to thank you for your quick response and to let you know that I have since contacted the IRS and they actually weren’t too excited about it. I was told that all I had to do was submitt a 2010 form 8606 now and then file my 2011 tax forms (mailed separately). I was told that I would be able to split the total taxable amount of the rollover between 2011 and 2012 as planned and the worst that would happen is that I could be charged $50 for failure to fill out the form last year. They also said that many people probably made this mistake and since I contacted them, there would most likely not be a $50 charge.

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