Retirement learning center · updated October 24, 2026
IRS Form 8606 and Retirement Tax Reference Encyclopedia
Use this reference to resolve a term, distinguish similar transactions or identify the records behind a reporting question. It contains a full glossary and grouped technical FAQ, separate from the long-form article library.
A federal return subtotal after specified adjustments and before the standard or itemized deduction. It is different from taxable income and from each program's modified AGI. A taxable Roth conversion can increase AGI even when a separate eligibility worksheet later makes its own adjustment.
Filing status
After-tax basis
An amount recognized for IRA tax allocation that has already been taxed, commonly from nondeductible traditional IRA contributions. It is not the market value of the account or the purchase cost of investments inside it. Prior recoveries reduce what remains available for later years.
Allocation
Aggregation rule
The ordinary IRA rule that considers the owner's applicable traditional, traditional SEP and traditional SIMPLE IRAs together for basis allocation. Opening another account at another custodian does not partition the basis pool. Each spouse still has a separate owner-level calculation.
Allocation
Backdoor Roth IRA
A common label for an eligible nondeductible traditional IRA contribution followed by a Roth conversion. It is not a separate account category or a guaranteed tax-free transaction. Contribution eligibility, existing IRA balances, timing and reporting still determine the result.
Allocation
Basis carryforward
Unrecovered basis retained for future IRA distributions or conversions, generally reflected on Form 8606 line 14 under the ordinary rules. Reconcile the prior form and intervening events before bringing it into a later year's opening basis. Do not count it again as a new contribution.
Documentation
Conduit IRA
A commonly used description for an IRA holding assets rolled from an employer plan. The label alone does not determine whether a receiving plan will accept a later rollover. It also does not exclude the IRA from ordinary year-end aggregation.
Rollovers
Contribution versus conversion
A regular contribution adds eligible savings for a designated tax year and uses the annual contribution limit. A conversion moves eligible existing retirement assets to Roth treatment in the calendar year completed. A conversion does not use the regular IRA contribution dollar cap.
Timing
Cream-in-the-coffee rule
An analogy for proportional allocation of after-tax basis and pre-tax IRA value. It explains why a taxpayer cannot choose basis merely by selecting an account number. The analogy is not a substitute for specific rollover, inherited-account, repayment or excluded-distribution rules.
Allocation
Custodial reporting
Information a custodian reports about transactions it handled, such as Forms 1099-R and 5498. The custodian may not know deductions, basis or balances held elsewhere. Its reporting must be reconciled with the taxpayer's complete annual history rather than treated as an aggregate tax calculation.
Documentation
December 31 valuation rule
The ordinary use of applicable year-end IRA fair market values on Form 8606 line 6. A later incoming rollover can affect an earlier conversion's annual allocation. Use the actual remaining value, with relevant outstanding-rollover treatment, rather than a pre-conversion balance.
Timing
Direct rollover
An eligible distribution moved directly to an eligible receiving retirement plan under the applicable rules. Source and destination types, taxable portions and plan terms matter. It is different from assuming every transfer between any two retirement accounts is an eligible rollover.
Rollovers
Excess contribution penalty
An additional-tax issue that can arise when regular IRA contributions exceed the permitted amount and are not corrected under the applicable rules. Compensation, MAGI eligibility and combined traditional/Roth contributions can matter. Do not confuse a large conversion with an excess regular contribution.
Filing status
Five-year aging rules
Separate Roth rules concerning qualified distributions and potential additional tax on early distributions of converted taxable amounts. The first Roth contribution tax year and each conversion year can matter differently. Distribution ordering and age must be reviewed before applying either clock.
Distributions
Form 1099-R boxes 1, 2a and 2b
Box 1 generally shows gross distribution; box 2a can show a taxable amount; box 2b can indicate that taxable amount is not determined. Those fields do not necessarily resolve basis held elsewhere. Supply complete records for Form 8606 instead of treating uncertainty as zero tax or full tax automatically.
Documentation
Form 1099-R box 7
Distribution codes help identify the custodian's reported transaction category. A code is important evidence but does not provide the owner's full contribution, basis or aggregation history. Read the applicable year's instructions and resolve incorrect or corrected forms with the issuer.
Documentation
Form 5498 timing
IRA contribution-related information can be issued after the ordinary individual filing deadline. Retain confirmations showing the actual deposit and designated tax year. Receiving the information form later does not create another contribution or necessarily justify counting the amount twice.
Documentation
Form 8606 Part I
The part covering nondeductible traditional IRA contributions and the relevant distributions or partial conversions described in its heading. Its no-distribution branch can stop after carrying basis forward. A planning table's extra rows do not override those official filing instructions.
Documentation
Form 8606 Part II
The part reporting conversions from traditional IRAs to Roth IRAs through lines 16–18. In a prior-basis-only full-conversion situation, it can apply directly without Part I being required solely for that conversion. Follow the form heading and line 17 instructions for the actual facts.
Documentation
Form 8606 Part III
The part used for certain Roth IRA distributions. It requires contribution and conversion history, ordering rules and qualified-distribution analysis. The ordinary traditional IRA conversion estimator does not compute every Part III outcome or associated additional tax.
Distributions
Indirect 60-day rollover
A distribution that may qualify for rollover when the applicable conditions and completion deadline are met. Withholding, source/destination restrictions and the one-rollover-per-year rule can matter. The rule should not be confused with a limit of one Roth conversion per year.
Rollovers
Inherited IRA exclusion
Inherited IRA treatment depends on beneficiary status and the applicable rules; a nonspouse inherited account is not simply added to the beneficiary's own ordinary IRA pool. Spousal elections and rollover options require separate analysis. Do not force inherited facts into the standard owner model.
Rollovers
IRC § 408(d)(2)
The Internal Revenue Code's IRA aggregation framework used in ordinary basis allocation. The owner's applicable plans and annual transactions must be considered together. Form 8606 operationalizes the calculation, while its instructions identify exclusions and special adjustments.
Allocation
IRC § 408(d)(3)
The IRA rollover provisions, including conditions for eligible rollover treatment and the special taxable-only IRA-to-plan route. A permitted tax rule does not require a particular employer plan to accept a transaction. Account type, timing and excluded amounts remain relevant.
Rollovers
Modified adjusted gross income (MAGI)
An adjusted income measure defined separately for a particular tax benefit or charge. Roth contribution eligibility, IRA deductions, NIIT, Medicare premiums and Marketplace credits do not all use the same adjustments. Baseline taxable income is not a universal substitute.
Filing status
Net unrealized appreciation (NUA)
A specialized employer-securities distribution topic that can have different tax treatment from an ordinary cash rollover. Moving assets into an IRA can affect available treatment. The pro-rata calculator does not decide an NUA strategy or whether a particular distribution qualifies.
Rollovers
Nondeductible traditional IRA contribution
An eligible regular traditional IRA contribution not deducted on the return. It can establish basis reported through Form 8606. It is still subject to contribution and compensation limits, and its nondeductible status does not make every later conversion fully tax free.
Allocation
Ordering rules for Roth distributions
The framework generally treating regular contributions as distributed before conversion/rollover contributions and earnings, with further ordering across conversion years and taxable portions. The taxpayer needs a complete Roth history across accounts, not only the balance at the withdrawing custodian.
Distributions
Pro-rata ratio
The ordinary line 5 available basis divided by line 9 annual pool, capped at one. The form calls for at least three decimal places; the site's preview uses six below one. Internal precision is retained rather than recalculating from a shortened display.
Allocation
Qualified charitable distribution (QCD)
A distribution meeting specific charitable-transfer conditions under the applicable rules. It is not simply entered as an ordinary taxable IRA distribution in this model. Eligibility, exclusions and reporting require the relevant IRS guidance and can affect the Form 8606 analysis.
Distributions
Recharacterization after the TCJA
A permitted regular IRA contribution recharacterization is different from undoing a Roth conversion. Conversions made after 2017 generally cannot be recharacterized back to traditional IRA treatment. Returned and excess contributions have their own procedures and should not be modeled as a reversal by assumption.
Timing
Reverse rollover
The common name for moving eligible pre-tax IRA dollars into a receiving employer plan. After-tax IRA basis generally cannot be included under the IRA-to-plan rule. Plan acceptance, source restrictions and actual year-end treatment must be documented independently of a projected tax result.
Rollovers
Rollover IRA
A traditional IRA holding assets moved from another retirement arrangement. Its label does not remove it from the owner's applicable IRA aggregation. Whether a later receiving plan accepts those assets is a separate plan-specific question.
Rollovers
SEP IRA aggregation
Traditional SEP IRA values generally join the owner's applicable traditional IRA year-end pool. Roth SEP treatment must be distinguished from a traditional SEP account. Employer contributions are not automatically personal nondeductible contributions merely because the account is an IRA.
Allocation
SIMPLE IRA two-year rule
During the initial two-year participation period, tax-free transfers generally must remain within the permitted SIMPLE IRA route. A nonqualifying transaction can involve ordinary income and a 25% additional-tax issue unless an exception applies. Check the actual first-participation date and source type.
Rollovers
Solo 401(k)
A one-participant 401(k) arrangement for an eligible owner/business under the applicable participation rules. Establishment and business eligibility are not proved by a desired reverse rollover. Plan acceptance, investments, fees and documentation must be checked separately.
Rollovers
Spousal IRA
A regular IRA contribution arrangement potentially available under joint-return compensation rules. The IRA remains individually owned. Each spouse's regular contribution capacity, basis and required Form 8606 are evaluated separately rather than combining both IRA pools.
Filing status
25 technical questions and answers
Filing status
Do joint filers combine their IRAs for pro-rata purposes?
No. The ordinary IRA basis calculation is owner-specific. Each spouse who is required to file prepares a separate Form 8606, even though income is reported on a joint return. One spouse's traditional SEP IRA does not automatically make the other spouse's conversion partly taxable. Keep separate basis ledgers and account inventories, then review the household's combined income-tax and benefit effects.
Does filing separately always use the same Roth MAGI range?
Living arrangements matter. A married separate filer who lived with a spouse during the year generally uses the $0–$10,000 direct Roth contribution phase-out. Living apart all year can change the applicable category. Use the IRS worksheet for the actual year and status. A direct Roth contribution limitation is separate from eligibility to convert existing IRA assets.
Can high income remove the regular contribution limit?
No. A nondeductible contribution still requires eligible compensation and remaining annual traditional/Roth contribution capacity. High income can affect deduction or direct Roth eligibility, but does not create an unlimited contribution allowance. For 2025 the ordinary limit is $7,000 or $8,000 at age 50+, and for 2026 it is $7,500 or $8,600 at age 50+. Conversions use different rules.
Does a workplace plan prohibit a traditional IRA contribution?
Workplace coverage can limit a traditional IRA deduction at the applicable MAGI levels; it is not a blanket prohibition on an otherwise eligible contribution. A nondeductible amount needs proper basis reporting. Check whether the contributing spouse, the other spouse or both are covered. The reference table separates the deduction phase-outs from direct Roth contribution phase-outs.
Can one spouse use the other's basis?
No. Basis belongs to its IRA owner and must not be transferred into the other spouse's calculator simply because the return is joint. Divorce-related transfers, inherited accounts and similar special facts need separate guidance. The ordinary single-owner model should be run separately for each spouse, with a complete inventory and documented prior-year carryforward for that owner.
Is taxable income the same as MAGI for every rule?
No. Taxable income generally reflects deductions, while MAGI is defined separately for each eligibility test or income-related charge. A conversion can have different effects on Roth contribution eligibility, NIIT, IRMAA and Marketplace assistance. The site's progressive tax estimate uses baseline taxable income and does not calculate every program's MAGI or the full return.
Timing
Can a March conversion be assigned to the prior tax year?
A conversion generally belongs to the calendar year completed. A March 2026 conversion cannot be designated as a 2025 conversion merely because the underlying contribution was for 2025. The contribution and conversion can require reporting on different years' returns. Retain the actual completion confirmation and do not rely only on the contribution-year designation.
What does line 4 do for a contribution paid after year end?
It identifies the part of line 1 paid during the permitted following-year contribution window. Subtracting it from line 3 prevents that later-paid basis from being allocated to an earlier calendar-year distribution or conversion. It is a subset of line 1, not a second contribution. A no-distribution year uses the official branch after line 3 instead.
Can a November rollover affect a January conversion?
Yes. If eligible employer-plan assets are rolled into an applicable IRA and remain there at December 31, that year-end value can change the annual allocation for an earlier conversion. An empty IRA immediately after the January transaction does not freeze the annual result. Reconcile the complete calendar year's transactions and all applicable custodians.
Does a filing extension extend the IRA contribution deadline?
The ordinary regular IRA contribution deadline generally excludes extensions, although specific IRS relief can alter deadlines for affected taxpayers. A conversion follows the calendar-year completion rule rather than the regular contribution window. Check the applicable year's IRS instructions, announced relief and custodian processing requirements before relying on a date in a generic checklist.
What if no distribution or conversion occurred?
The official Form 8606 question after line 3 generally carries basis to line 14 and stops the remainder of Part I. A calculator can show explanatory values, but that display does not require every line to be completed on an actual return. Nondeductible contribution reporting can still be required even when there was no conversion.
When can a full conversion use Part II directly?
Under the 2025 Part I heading, a full conversion with only prior basis, no current-year nondeductible contribution and no other relevant distribution can be reported through Part II without Part I being required solely for that conversion. A zero year-end value by itself is not the entire test. Follow the heading and line 17 instructions for the actual facts.
Rollovers
Can after-tax IRA basis be moved into an employer 401(k)?
The ordinary IRA-to-plan rollover rule generally permits the otherwise taxable portion, not after-tax IRA basis. Publication 590-A describes the special treatment and conditions. A plan's willingness to accept a transfer does not establish that the entire mixed-basis IRA amount is eligible. Reconcile basis and source records before certifying a pre-tax amount.
Does every plan have to accept a reverse rollover?
No. Permissible rollover treatment and actual plan acceptance are different questions. Ask about the exact IRA source type, pre-tax certification, direct-rollover process, timing and fees. A generic plan statement that rollovers are accepted may refer only to other employer plans. The strategy projection does not replace an administrator's source-specific acceptance.
Does a separate brokerage account avoid the pro-rata rule?
No. The ordinary allocation considers the owner's applicable traditional, traditional SEP and traditional SIMPLE IRAs together. Choosing a different brokerage or naming an account backdoor does not partition basis. A valid IRA-to-plan rollover follows a separate specific rule; simply moving assets to another IRA generally does not remove them from the applicable pool.
How do SIMPLE participation dates affect a transfer?
The initial two-year participation period imposes restrictions on tax-free transfers out of the SIMPLE framework. A nonqualifying transfer can have income and additional-tax consequences. Obtain the actual first-participation date and review permitted destinations. The ordinary pro-rata result should not be used as evidence that an otherwise restricted SIMPLE transfer is eligible.
Are all outstanding rollovers added to line 6?
No. The IRS line 6 instructions define relevant outstanding rollover treatment, and an outstanding IRA-to-qualified-plan rollover is not mechanically treated like an outstanding IRA-to-IRA rollover. Record source, destination, distribution date, receipt date and completion status. If the classification is unresolved, flag it rather than entering zero simply to preserve a preferred outcome.
Is an owner-only business enough to assume Solo 401(k) eligibility?
The business and participation facts must satisfy the applicable plan rules. An eligible plan must be properly established and must accept the proposed source and amount. A desire to remove IRA value from the denominator does not create business or plan eligibility. The table can show an explicitly conditional projection while those facts remain subject to confirmation.
Does the one-rollover-per-year rule mean one conversion?
No. The rule relevant to certain IRA-to-IRA indirect rollovers is not a limit of one Roth conversion per year. Direct trustee transfers and employer-plan rollovers also have their own treatment. Avoid applying one phrase to every retirement movement. Keep each transaction's actual source, destination and method with its records.
Audit documentation
Which documents establish prior basis?
Start with prior filed Forms 8606 and the related returns, then reconcile contribution confirmations, deduction treatment and intervening distributions. Forms 5498 and 1099-R support the history but do not necessarily prove the owner's full aggregate basis. A transcript can help investigate missing information without being a guaranteed complete replacement for all historical records.
Does box 2b mean a conversion is automatically taxable?
Taxable amount not determined generally signals that the custodian has not supplied the final taxable calculation. It does not prove either full taxability or zero taxability. The taxpayer must supply basis, applicable year-end values and the other annual facts needed for Form 8606. Resolve incorrect or corrected forms with the custodian and preparer.
Must every missing Form 8606 be fixed with Form 1040-X?
The proper procedure depends on what was omitted or incorrect and whether taxable income or other return items changed. A late standalone form can be relevant in some cases; an amended return can be required in others. Use the applicable year's instructions and review penalties, reasonable cause and effects on later basis carryforwards with a qualified preparer.
What evidence supports a reverse-rollover projection?
Retain basis reconciliation, source account statements, the receiving plan's acceptance, required pre-tax certification, distribution confirmation and receipt or completion evidence. Check the actual year-end and outstanding-transaction treatment. A submitted transfer request or a zero-dollar website projection is not sufficient proof that the tax conditions and plan requirements were met.
How should a split-year contribution be tracked?
Record both the actual payment date and designated contribution tax year, then record the conversion's separate calendar-year completion date. Link all related documents to the same event instead of treating each form as a new contribution. Carry the prior-year basis into the conversion-year calculation without entering the same amount again as a fresh current-year contribution.
What should I send when reporting a calculator issue?
Use a fabricated example with the page address, tax year, inputs, actual result, expected result and official source. Do not send tax returns, Social Security numbers, account numbers or passwords. Public support can investigate website behavior but is not a confidential individualized tax-advice channel. Keep actual records with an appropriate personal or professional system.
Definitions identify the ordinary rule and its limits. Match the owner, tax year, account type and transaction before applying a term to your records. A short reference answer does not determine eligibility for a particular rollover, correction or distribution. Follow its context into the linked IRS form or a complete guide when a question involves timing or an exception.
The site models one owner at a time and distinguishes allocation, income-tax estimation and official filing branches. Use the guide library for numerical walkthroughs, methodology for formulas and source versions, and the document checklist for evidence you still need. A missing record should remain an unresolved fact rather than be replaced with zero merely to obtain a result.
Sources and next steps
Updated October 24, 2026. Source links are references, not IRS endorsement or independent professional certification. Check the source year and the assumptions in each explanation.