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In a quick review of my old tax returns, it appears that I filed a 8606 in 3 of the 4 years I made non deductible contributions. Do I understand that I would have to pay a penalty (I think I read $50, but I am not sure) for any year I failed to file a 8606?

To get all the facts in one place:

Your wife has a traditional IRA which is worth about $25,000 and has $22,000 of nondeductible contributions, most of which have been properly reported on Form 8606. She is over 59 1/2 and wants to move these funds to a taxable investment account.

We're almost to the point that we can answer your question about the tax consequence of this move, but there's still one piece of missing information. Does she have any other traditional IRA accounts, including SEP, SIMPLE, and rollovers from employer plans?

As for the missing 8606, what tax year is it for, and where does it fall in the sequence of years contributions were made?

Rule Your Retirement Home Fool
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