Yet another recharacterization question...

[Guest Gordo]

I'm having trouble filling out Form 8606. Here's my situation:

In April I converted my traditional IRA to a Roth IRA and made my $2000 annual contribution (to the Roth IRA).

In October, I recharacterized my entire Roth IRA back to a traditional IRA, then immediately converted it all back to a Roth IRA to take advantage of the drop in the stock market.

My question is how do I account for my $2000 contribution on Form 8606? Since the $2000 was already taxed before I put it into my Roth IRA the first time, it doesn't seem right that it would be taxed again as part of my second conversion from the traditional IRA to the Roth IRA.

Any help would be greatly appreciated....

[Guest akhan]

I'm having a problem with my 8606 form also. I converted my traditional IRA to a Roth in Dec. 1998. The problem I have is that I started my IRA contributions back in '95. I was only able to fund the IRA in '95 with $500 for which I took a deduction. Since then I have had a 401K plan with my employer and have not been able to take any further deductions. I have continued to fund the IRA but without taking the deduction. Since I have converted to the Roth IRA, I'm having a problem with reporting to the IRS that only the initial $500 is to be taxed and not the rest of the conversion because I have already paid taxes on the rest of it. I hope I'm making some sense with my explanation. Your help in this matter would be greatly appreciated.

akram