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What tax forms are required when completing a Backdoor Roth IRA?

 When completing a Backdoor Roth IRA, several IRS forms are involved to properly report the contribution and conversion. These forms ensure the IRS can track after-tax contributions and Roth conversions and calculate the correct taxable amount.

Some forms must be filed with your tax return, while others are provided by your financial institution for reporting purposes. 

 

Form 8606 — Nondeductible IRAs

Form 8606 is the primary form used to report a Backdoor Roth IRA.

You must file this form with your Form 1040 tax return if you:

• Make a non-deductible contribution to a Traditional IRA

• Convert funds from a Traditional IRA to a Roth IRA

Form 8606 is used to:

• Report your non-deductible Traditional IRA contribution

• Track your after-tax basis in your IRA accounts

• Calculate the taxable and non-taxable portion of the Roth conversion

• Apply the pro-rata rule if you have other IRA balances

Failing to file Form 8606 could cause the IRS to treat the entire conversion as taxable income.

 

Form 1099-R — Distribution From Retirement Accounts

When you convert funds from a Traditional IRA to a Roth IRA, your IRA custodian will issue Form 1099-R.

This form reports:

• The amount distributed from the Traditional IRA

• The tax year of the distribution

• The distribution code that indicates a Roth conversion

You typically receive Form 1099-R in January of the year following the conversion. The information from this form must be included when preparing your tax return.

 

Form 5498 — IRA Contribution Information

Your financial institution will also issue Form 5498, which reports:

• Contributions made to your Traditional IRA

• The Roth conversion amount

• The fair market value of your IRA

Form 5498 is usually issued in May of the following year. This form is primarily for record-keeping purposes and typically does not need to be filed with your tax return.