1. Other IRA Considerations PUB 17 CH 17 Form 8606 Module NJ 1.17.2

2. OTHER IRA CONSIDERATIONS  IRA non-deductible contributions  IRA distributions after non-deductible contributions  Roth IRA non-qualified distributions are out of scope

3. IRA NON-DEDUCTIBLE CONTRIBUTIONS Non-Deductible Contributions Alternative when Deductible is limited by Income and/or Retirement Plan Can be made up to maximum for year Total of Deductible and Non-Deductible cannot exceed maximum for year. $5,000($6,000 over 50 yrs of age) max for 2009

4. REPORT DEDUCTIONS ON FORM 8606 Non-Deductible contributions MUST be reported on Form 8606 Creates Basis in IRA Withdrawal If not reported, no tax-free benefit on distribution Form 8606 provides cumulative record Non-Deductible Contributions (cost basis) Distributions

5. FORM 8606 Part I – For reporting non-deductible contributions as well as distributions Distributions reported here only if there were non- deductible contributions Part II – Conversions Out-Of-Scope Part III – non-qualified distributions from Roth IRAs Out-of-Scope

6. NON-DEDUCTIBLE CONTRIBUTIONS TaxWise enters amount in Line 1, Part I (from IRA worksheet). Taxpayer must provide amount for entry into Line 2 (basis for earlier year).

7. FORM 8606 Taxpayer info.

8. NON-DEDUCTIBLE CONTRIBUTIONS Distribution? No – Done  Yes – Complete Lines 4 and 6 of Form 8606  TaxWise does calculation automatically Purpose of this is to pro-rate non-taxable amount (basis) over life of IRA. Taxpayer must provide value of all Traditional IRAs – Form(s) 5498 (or year-end statements)

9. Note: This form looks to be from 2007 – the amounts may not be correct…

10. IRA DISTRIBUTIONS If there have been non-deductible contribution(s) in the 1099R distribution: KEY: In TaxWise – Check first box on Line 5 of 1099-R, exclusion worksheet. This activates Form 8606. IMPORTANT KEY: Select 8606 from the Tree and complete

11. FORM 1099-R

12. Watch out…. Do NOT create a Form 8606 by using “Add Form” Form 8606 automatically populates on the tree when Exclusion Worksheet Line 5 is checked VERY IMPORTANT!