401(k) rollover of after-tax basis and TurboTax

[Guest BruceCM]

If an individual retired and transferred their 401(k), with basis, to their IRA, where is this basis accounted for on the 8606?

It seems TurboTax will not automatically create an 8606 for this transfer, even when block 5 of the 1099-R shows a pretax amount. So would this just be done on the side (out of TT) on the 8606? And where would you enter the after-tax amount....line 1 or 4?

And if so, I'd assume one would need to attach a sheet explaining this entry if the amount of the after-tax transfer exceeds the annual contribution limit...yes?

BruceM

[Appleby]

Line 1 seems like the better fit.

Form 8606 is deficient in that regard- it need to be updated to account for rollover of after-tax amounts

[txdd]

The instructions for Form 8606 seem to say that you do not file an 8606 just to report an after-tax 401k to IRA transfer. However, the next time you file an 8606 for some other reason, you do add in the after-tax amount into your prior basis.

I'm no fan of TurboTax but it looks like it's correct on this one.