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If a recent retiree rollover a 401K to an IRA, and turn around and make a withdrawals can the rollover 401K funds be considered his basis on Form 8606?

This taxpayer, retired 1/2016, and rollover $142,132 from a 401K to a Rollover IRA With Fidelity Investment. He turned around and withdrawn $93,569. Which he received a 1099R, showing that it is taxable and the "taxable amount not determined" box checked. How is this reported on Form 8606

His 2016 Fidelity Investment Report shows a beginning bal or zero and $197,457 Addition during 2016 (including the $132,132 401K Rollover ). $93,570 was withdrawn, leaving a balance of $60,830 on 12/31/16. Also, there's is $55,326 (included in the $197,457 not accounted - I don't know how it got there, the report don't reflect how it got there, and he doesn't know) . Fidellity transferred the $55,326 out to purchase more security. Can he use the the $55,326, plus the $142,132 401K rollover as his Basis on line 2 of Form 8606.
Basis in a 401K Rollover to a IRA
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Tax Professional Answers

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John Stancil
Basis is obtained only when the taxpayer makes contributions to the retirement plan and pays tax on those constributions, as one would with a non-deductible traditional IRA, or a Roth IRA. If he had no basis in the 401(k), he doesn't get basis just by transferring it to an IRA. As far as the $55,326 you need to determine if there was basis in that previously. You should be able to tell by referencing Form 8606 is it was properly completed.
Leave a Comment 23 weeks ago

User Photo
John Stancil
Basis is obtained only when the taxpayer makes contributions to the retirement plan and pays tax on those constributions, as one would with a non-deductible traditional IRA, or a Roth IRA. If he had no basis in the 401(k), he doesn't get basis just by transferring it to an IRA. As far as the $55,326 you need to determine if there was basis in that previously. You should be able to tell by referencing Form 8606 is it was properly completed.
Leave a Comment 23 weeks ago



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