Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.
I am 68 and converted my IRA to a Roth in 1998. I understand that I can spread the taxes due on the original IRA over four years. Are there special forms? What do I do?
As a rule, you may spread the taxable portion of any income attributed to a conversion from a traditional to a Roth IRA during 1998 over a four-year period.
If your filing status is married filing separately or your modified adjusted gross income for purposes of Roth IRAs is greater than $100,000, you were not entitled to make such a conversion and such conversions must be recharacterized. If your conversion was appropriate, you must complete Form 8606 and include it with your Form 1040. It is important to note that the four-year spread is not mandatory and benefits may exist for including all of the income in the current year. Form 8606 has thorough instructions and should be relatively easy to complete.
Please note that for amounts converted to a Roth IRA after Dec. 31, 1998, the four-year spread does not apply. Any income associated with the conversions occurring in 1999 or thereafter is required to be reported on the return, in full, for the year of the conversion.
Christopher Getty, CPA PricewaterhouseCoopers LLP
The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.
To ask a tax question, call Sundial, The Sun's telephone information service, at 410-783-1800. Call 410-268-7736 in Anne Arundel County, 410-836-5028 in Harford County, 410-848-0338 in Carroll County. Using a Touch-Tone phone, punch in the four-digit code 6225 after the greeting. To submit questions by e-mail and access an online tax guide, go to The Sun's Web site at www.sunspot.net/tax.
Selected questions will be answered in the Business section. No questions will be answered personally.
Pub Date: 2/19/99