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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121594  
Subject: Re: IRA RMD & Non-Taxable Money Date: 9/24/2004 7:14 AM
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Schwab made my Required Minimum Distribution (RMD) for 2002, on the entire fund, prorating the non-taxable amount and showing it as non-taxable in Box 5 on the 1099R.

The middle of December 2003, Schwab informed me they could no longer service the account, and I rolled it over to a Traditional IRA with Vanguard. Schwab calculated the RMD for 2003 on the entire amount, and paid me in non-taxable money from my supplemental account and showed it as non-taxable in Box 5 of the 1099R. In addition, Schwab sent me another 1099R showing the full remaining amount as a rollover (G), with the remaining non-taxable amount in Box 5.

This non-taxable amount is now officially part of my Traditional IRA with Vanguard who does not recognize it as non-taxable and advised that I had to file Form 8606 with my income tax return so the non-taxable amount could be prorated.

Non-deductible IRAs required Form 8606 be filed the year the contribution was made, but since this was supplemental money I had paid taxes on and not a non-deductible IRA, I did not file Form 8606.


This is where you went wrong. You were required to file that 8606. Go back and file the 2003 8606 to establish the previously-taxed basis in your traditional IRA, and you'll be good to go.

Phil
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