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Old 02-23-2015, 03:00 PM
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Location: Plano, TX
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Error in Reporting After Tax Contributions

When I turned 59 1/2, I took an In-Service withdrawal from my 401(k) and rolled 90% of the balance to my Traditional IRA. Later, when I retired, I took the remainder and rolled it over to the same Traditional IRA. I had make after-tax contributions to the 401(k) during the 2001-2003 time frame. During that time, my employer switched the 401(k) from Fidelity to MFS. When I took the In-Service withdrawal and rollover in 2006, MFS credited me with 12K in after-tax contributions, which I reported on Form 8606. When I rolled the final 401(k) balance over in 2009, MFS credited me with another 1K of after-tax contributions which, through oversight, I failed to report.

Now, 5 years later, I am preparing to take RMD's from the IRA. In checking the MFS statements against my pay check stubs, I discovered that MFS failed to credit me with the after-tax contributions I made before the 401(k) was transferred from Fideility to MFS (they were characterized as transfers, rather than contributions). My bad for not checking the after-tax amounts at the time, but I under reported them by about 4K in 2006.

Is there any way, at this late date, to avoid paying tax again on the 5K (4K from 2006 and 1K from 2009) that was either under-reported (2006) or unreported (2009)?

in reading the instructions for Form 8606, it appears there is a $50 penalty for failure to file, but it says nothing about other consequences. Could I just use the correct total in calculating the RMP in 2015 and pay the $50?



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Old 02-23-2015, 09:59 PM
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Now, 5 years later, I am preparing to take RMD's from the IRA. In checking the MFS statements against my pay check stubs, I discovered that MFS failed to credit me with the after-tax contributions I made before the 401(k) was transferred from Fideility to MFS (they were characterized as transfers, rather than contributions). My bad for not checking the after-tax amounts at the time, but I under reported them by about 4K in 2006.

Is there any way, at this late date, to avoid paying tax again on the 5K (4K from 2006 and 1K from 2009) that was either under-reported (2006) or unreported (2009)?==========>>>>>>>>>>I do not think so aslongas you keep form 8606; aslongas you made any nondeductible contributions to your IRA, then you should have filed Form 8606 with your tax return for the year of the contribution. Each 8606 you file shows your cumulative nondeductible contributions, which is your tax basis in the IRA. If you don’t have that paperwork, then you’ll need to do some detective work. Your IRA administrator doesn’t keep records showing whether your contributions to the traditional IRAwere tax-deductible. However, he can provide copies of Form 5498, which reports the amount of each contribution and whether it was for a traditional or a Roth IRA.You can then compare that information with your tax records to see whether you had taken a deduction in those years.unless you have your old income-tax returns, you can order them from the IRS for $57 each using Form 4506.


in reading the instructions for Form 8606, it appears there is a $50 penalty for failure to file, but it says nothing about other consequences. Could I just use the correct total in calculating the RMP in 2015 and pay the $50?============>>>>>>>>> After you solve the issue, you will also need to submit Form 8606 to the IRS reporting the nondeductible contributions. You’re generally supposed to pay a $50 penalty if you didn’t file Form 8606 when you made the contributions, unless you can prove that the failure was due to reasonable cause. If you didn’t file the required forms,
you need to contact the IRS, explaining your situation and asking about the best procedure. You can file a separate Form 8606 for each year in which you failed to do so, then you’d just wait to see whether the IRS decides to assess a $50 penalty for each year. If there was reasonable cause for not filing prior forms, you can always request an abatement of penalties



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Old 02-23-2015, 10:31 PM
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After you solve the issue, you will also need to submit Form 8606 to the IRS reporting the nondeductible contributions. You’re generally supposed to pay a $50 penalty if you didn’t file Form 8606 when you made the contributions, unless you can prove that the failure was due to reasonable cause. If you didn’t file the required forms,
you need to contact the IRS, explaining your situation and asking about the best procedure. You can file a separate Form 8606 for each year in which you failed to do so, then you’d just wait to see whether the IRS decides to assess a $50 penalty for each year. If there was reasonable cause for not filing prior forms, you can always request an abatement of penalties[/quote]

Thanks for the response. I've got the amounts nailed down to the penny by reviewing old check stubs. The issue is with how the second 401(k) administrator characterized the contributions that were transferred to it (before the rollover to my IRA). I was/am concerned with the fact that I did not report them accurately in the years when they were rolled over to the IRA. It was my understanding that I could not amend the 8606 after the deadline for filing an amended tax return had passed.



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