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URL:  http://boards.fool.com/technical-ira-questions-29112825.aspx

Subject:  Technical IRA Questions Date:  2/17/2011  6:42 PM
Author:  FoolRedo Number:  68475 of 75381

Perhaps these are best reserved for a tax/accounting professional, and if so, I appreciate you tellinng me so :-)

I have a Rollover IRA in my name, and a Traditional IRA in my wife's that I've not been a very good custodian of, and now I want to ensure I have my record-keeping in order moving forward so that there's no issues down the road when we finally retire and want to take distributions, etc.

My Rollover IRA received a rollover distribution from a qualified employer's plan (401(k)) in early 2004. A couple of trades were made over the course of the next several months, and ultimately, I took a non-qualified distribution of the entire account balance, paying the taxes and fees, etc, as appropriate. The balance withdrawn from the account was $2,766.95 less than the original rollover amount due to poor trading (I know - I made lots of stupid mistakes in the past), and the balance left following the non-qualified distribution was $0.02 which has sat untouched in the account since 2004. I would have filed a Form 8606 in 2004 if required (I'd have to pull my taxes to verify, and don't have access right now); but definitely have filed anything on this account since then.

In the wife's Traditional IRA, 42 shares of an Index Fund were transferred directly into the account in early 2003 (I don't even remember where these came from... that would take some digging), and later and additional $400 of regular cash contributions were made. Funds were bought and sold over the course of the next year, and in 2004, a non-qualified distribution of the entire account was taken, leaving a balance of $0.21 (which strangely enough, seems to have disappeared... the current available balance on the account - accordinng to the website - is $0.00, not $0.21). As before, I'm certain the correct paperwork was filed in 2003 and 2004, and that nothing has been filed since.

What I am looking to do is start fresh with the wife's account... make regular, tax-deductible contributions, not take any further non-qualified distributions, and allow the investment and earnings to accumulate until retirement ( > 30 years from today).

Based on the previous activity in the account, is there anything special I need to do? Am I delinquent on 6 years of Form 8606, or since the account balance has been $0.00 (or $0.21) since 2004, with no activity, is it alright? Do I have any basis in the account, or since the last activity was a complete distribution and the current available balance is $0.00, is it just as good as starting from a new account, and I should just keep my records moving forward?

With the Rollover account in my name, I think I need to simply close that one out and be done with it - I do not plan on any further contributions to that account as I have a Roth that will recieve my contributions moving forward.

And lastly, regarding that Roth, it has a current balance of $54.12 - essentially it was opened in 2003 with an ACH transfer of cash, has accumulated a few cents of interest over the years, but has had no further activity. When I begin investing regularly in that account, filing the new 8606s, etc, will it be current? Is there anything I need to do to "account for" the past 7 years of inactivity (I haven't filed any 8606 since the first year, etc).

I know this was long, and I appreciate you reading this far. Any advice fellow fools can offer is greatly appreciated!

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FoolRedo
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