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IRS.gov Website
Current Year Tax Map
Publication 590
taxmap/pubs/p590-016.htm#en_us_publink1000231029

Can You Move Amounts
Into a Roth IRA?(p66)

rule
You may be able to convert amounts from either a traditional, SEP, or SIMPLE IRA into a Roth IRA. You may be able to roll over amounts from a qualified retirement plan to a Roth IRA. You may be able to recharacterize contributions made to one IRA as having been made directly to a different IRA. You can roll amounts over from a designated Roth account or from one Roth IRA to another Roth IRA.
taxmap/pubs/p590-016.htm#en_us_publink1000231030

Conversions(p66)

rule
You can convert a traditional IRA to a Roth IRA. The conversion is treated as a rollover, regardless of the conversion method used. Most of the rules for rollovers, described in chapter 1 under Rollover From One IRA Into Another, apply to these rollovers. However, the 1-year waiting period does not apply.
taxmap/pubs/p590-016.htm#en_us_publink1000231032

Conversion methods.(p67)

rule
You can convert amounts from a traditional IRA to a Roth IRA in any of the following three ways.
taxmap/pubs/p590-016.htm#en_us_publink1000231033
Same trustee.(p67)
Conversions made with the same trustee can be made by redesignating the traditional IRA as a Roth IRA, rather than opening a new account or issuing a new contract.
taxmap/pubs/p590-016.htm#en_us_publink1000248508

Income.(p67)

rule
You must include in your gross income distributions from a traditional IRA that you would have had to include in income if you had not converted them into a Roth IRA. These amounts are normally included in income on your return for the year that you converted them from a traditional IRA to a Roth IRA. For 2010 conversions, special rules apply. See How to treat 2010 conversions to Roth IRAs next.
taxmap/pubs/p590-016.htm#en_us_publink1000265791

How to treat 2010 conversions to Roth IRAs.(p67)

rule
If you converted amounts from a traditional IRA in 2010 to a Roth IRA, any amount you have to include in income as a result of the conversion is generally included in income in equal amounts in 2011 and 2012. If you also took a distribution from your Roth IRA in 2010 or 2011, see Distributions from Roth IRAs, later, to figure the taxable amount for 2012. Otherwise, include on Form 1040, line 15b; Form 1040A, line 11b; or Form 1040NR, line 16b, the amount from your 2010 Form 8606, line 20b.
Note.You may have elected to include the entire amount in income in 2010. If you did, this discussion does not apply to you.
taxmap/pubs/p590-016.htm#en_us_publink1000265793
Change in filing status.(p67)
A change in filing status or a divorce does not affect the application of the 2-year income spread rule for 2010 conversions.
taxmap/pubs/p590-016.htm#en_us_publink1000265794
Distributions from Roth IRAs.(p67)
If you include the taxable part of a 2010 conversion in equal amounts over the 2-year period (2011 and 2012) and in 2010 or 2011 any amount allocable to the taxable amount of the conversion is distributed from the Roth IRA, you generally included in income in 2011 both the ratable (one-half) portion for 2011 and the part of the distribution made during the year that is allocable to the 2012 taxable part of the conversion.
Any amount allocable to the conversion that is included in income in 2010 or 2011 because of a distribution from the Roth IRA first reduces the taxable amount that is reportable in income in 2012. Depending on the amount of the distribution, the taxable amount reported in 2011 could also have been reduced. The most that can be included in income because of a distribution of a conversion amount for any one year is the total amount required to be included in income for 2011 and 2012 minus the amounts included in income in all preceding years in the period.
If you received a distribution from your Roth IRA in 2011, look at your 2011 Form 8606, line 38, to determine the taxable part of the distribution and any taxable amount allocable to the 2010 conversion that must be reported on your 2012 Form 1040, line 15b; Form 1040A, line 11b; or Form 1040NR, line 16b. If you also had an amount on your 2010 Form 8606, line 25b (rollover to a Roth IRA), report the amount from your 2010 Form 8606, line 38, only on Form 1040, line 15b; Form 1040A, line 11b; or Form 1040NR, line 16b.
If you received a distribution from your Roth IRA in 2010, but not in 2011, complete the following worksheet to figure the amount to enter on Form 1040, line 15b; Form 1040A, line 11b; or Form 1040NR, line 16b. Also, see the example after the worksheet.
taxmap/pubs/p590-016.htm#en_us_publink1000283856

2012 Taxable Amount Due to
2010 Conversion to a Roth IRA—Worksheet

1. Line 20b of 2010 Form 8606 1.
2. Line 33 of 2010 Form 86062.
3. Subtract line 2 from line 13.
 
  • If line 3 is zero or less, then you do not have any reportable taxable amount in 2012 due to the 2010 conversion from traditional, SEP, or SIMPLE IRAs to a Roth IRA.
  • Otherwise, include the result on Form 1040, line 15b; Form 1040A, line 11b; or Form 1040NR, line 16b.
EIC
If you have entries on both lines 20b and 25b of your 2010 Form 8606, you will only enter 1/2 of the amount reported on line 33 of your 2010 Form 8606 on line 2 of the worksheet above. Additionally, when you fill out the 2012 Taxable Amount Due to a 2010 Roth IRA Rollover—Worksheet in Publication 575, enter 1/2 of the amount reported on line 33 of your 2010 Form 8606 on line 2 of that worksheet .
taxmap/pubs/p590-016.htm#en_us_publink1000265795

Example.(p67)

In January 2010, you converted $20,000 to a new Roth IRA from a traditional IRA. You completed Part II of Form 8606 for 2010 showing a $20,000 taxable conversion on line 18. You spread the taxable amount over 2011 and 2012 and entered $10,000 on lines 20a and 20b. This $20,000 conversion was the only amount put into your Roth IRA.
In December 2010, you took a distribution of $12,000 from your Roth IRA. The entire $12,000 distribution was allocable to the taxable part of the conversion shown on your 2010 Form 8606, line 33. Since you already included $12,000 (line 15b of your 2010 Form 1040) of the $20,000 in income in 2010, only $8,000 remains to be taxed in 2011 and 2012.
In 2011, you included the $8,000 (the amount that remains to be taxed) on your 2011 Form 1040, line 15b. You will not have any amount to report in 2012 due to your 2010 conversion because you have already reported the entire taxable amount of your 2010 conversion ($20,000) in your income for 2010 and 2011 ($12,000 in 2010 and $8,000 in 2011). You did not have any other transactions involving your Roth IRA for 2011.
taxmap/pubs/p590-016.htm#en_us_publink1000265796
Death of Roth IRA owner.(p68)
If a Roth IRA owner who is including amounts in income ratably over 2011 and 2012 dies before including all of the amounts in income, any amounts not included must generally be included in the owner’s gross income for the year of death. However, if the owner’s surviving spouse receives the entire interest in all the owner’s Roth IRAs, that spouse can continue to ratably include the amounts in income in 2011 and 2012. The election cannot be made or changed after the due date (including extensions) for the surviving spouse’s tax return that include the date of the owner’s death. Any amount includible in the decedent’s (owner’s) gross income for the year of death under this rule must be reported on the decedent’s final income tax return.
EIC
If you must include any amount in your gross income, you may have to increase your withholding or make estimated tax payments. See Publication 505, Tax Withholding and Estimated Tax.
taxmap/pubs/p590-016.htm#en_us_publink1000231034

More information.(p68)

rule
For more information on conversions, see Converting From Any Traditional IRA Into a Roth IRA in chapter 1.
taxmap/pubs/p590-016.htm#en_us_publink1000231036

Rollover From Employer's Plan Into a Roth IRA(p68)

rule
You can roll over into a Roth IRA all or part of an eligible rollover distribution you receive from your (or your deceased spouse's):Any amount rolled over is subject to the same rules for converting a traditional IRA into a Roth IRA. See Converting From Any Traditional IRA Into a Roth IRA in chapter 1. Also, the rollover contribution must meet the rollover requirements that apply to the specific type of retirement plan.
taxmap/pubs/p590-016.htm#en_us_publink1000231041

Rollover methods.(p68)

rule
You can roll over amounts from a qualified retirement plan to a Roth IRA in one of the following ways.
taxmap/pubs/p590-016.htm#en_us_publink1000231038

Income.(p68)

rule
You must include in your gross income distributions from a qualified retirement plan that you would have had to include in income if you had not rolled them over into a Roth IRA. You do not include in gross income any part of a distribution from a qualified retirement plan that is a return of contributions (after-tax contributions) to the plan that were taxable to you when paid. These amounts are normally included in income on your return for the year of the rollover from the qualified employer plan to a Roth IRA. For 2010 rollovers, special rules apply. See How to treat 2010 rollovers to Roth IRAs next.
taxmap/pubs/p590-016.htm#en_us_publink1000265797

How to treat 2010 rollovers to Roth IRAs.(p68)

rule
If you rolled over an amount from a qualified retirement plan to a Roth IRA in 2010 and did not elect to include the entire amount in income in 2010 by checking the box on line 24 of your 2010 Form 8606, see Publication 575 for information about figuring and reporting the amount you must include in income in 2012.
EIC
If you must include any amount in your gross income, you may have to increase your withholding or make estimated tax payments. See Publication 505, Tax Withholding and Estimated Tax.
For more information on eligible rollover distributions from qualified retirement plans and withholding, see Rollover From Employer's Plan Into an IRA in chapter 1.
taxmap/pubs/p590-016.htm#en_us_publink1000231044

Military Death Gratuities and Servicemembers' Group Life Insurance (SGLI) Payments(p68)

rule
If you received a military death gratuity or SGLI payment with respect to a death from injury that occurred after October 6, 2001, you can contribute (roll over) all or part of the amount received to your Roth IRA. The contribution is treated as a qualified rollover contribution.
The amount you can roll over to your Roth IRA cannot exceed the total amount that you received reduced by any part of that amount that was contributed to a Coverdell ESA or another Roth IRA. Any military death gratuity or SGLI payment contributed to a Roth IRA is disregarded for purposes of the 1-year waiting period between rollovers.
The rollover must be completed before the end of the 1-year period beginning on the date you received the payment.
The amount contributed to your Roth IRA is treated as part of your cost basis (investment in the contract) in the Roth IRA that is not taxable when distributed.
taxmap/pubs/p590-016.htm#en_us_publink1000231050

Rollover From a Roth IRA(p68)

rule
You can withdraw, tax free, all or part of the assets from one Roth IRA if you contribute them within 60 days to another Roth IRA. Most of the rules for rollovers, described in chapter 1 under Rollover From One IRA Into Another, apply to these rollovers. However, rollovers from retirement plans other than Roth IRAs are disregarded for purposes of the 1-year waiting period between rollovers.
A rollover from a Roth IRA to an employer retirement plan is not allowed.
A rollover from a designated Roth account can only be made to another designated Roth account or to a Roth IRA.
If you roll over an amount from one Roth IRA to another Roth IRA, the 5-year period used to determine qualified distributions does not change. The 5-year period begins with the first taxable year for which the contribution was made to the initial Roth IRA. See What are Qualified Distributions, later.
taxmap/pubs/p590-016.htm#en_us_publink1000231052

Rollover of Exxon Valdez Settlement Income(p69)

rule
If you are a qualified taxpayer and you received qualified settlement income, you can contribute all or part of the amount received to an eligible retirement plan which includes a Roth IRA. The rules for contributing qualified settlement income to a Roth IRA are the same as the rules for contributing qualified settlement income to a traditional IRA with the following exception. Qualified settlement income that is contributed to a Roth IRA, or to a designated Roth account, will be:
For more information, see Rollover of Exxon Valdez Settlement Income in chapter 1.
taxmap/pubs/p590-016.htm#en_us_publink1000231054

Rollover of Airline Payments(p69)

rule
If you are a qualified airline employee (defined earlier), you may contribute any portion of an airline payment you receive to a Roth IRA. The contribution must be made within 180 days from the date you received the payment. The contribution will be treated as a qualified rollover contribution. The rollover contribution is included in income to the extent it would be included in income if it were not part of the rollover contribution. Also, any reduction in the airline payment amount on account of employment taxes shall be disregarded when figuring the amount you can contribute to your Roth IRA.
taxmap/pubs/p590-016.htm#en_us_publink1000283859

Transfer of a Roth IRA rollover contribution.(p69)

rule
On February 14, 2012, the FAA Modernization and Reform Act was signed into law. This new law allows qualified airline employees (defined earlier), who previously made a rollover contribution of an airline payment (defined earlier) to a Roth IRA, to transfer a portion of that rollover contribution as a rollover contribution to a traditional IRA (also called a recharacterization). The maximum amount that can be transferred is limited to 90% of all airline payments received. The transaction must be a trustee-to-trustee transfer and the contribution will include any allocable income or loss. The transfer must have been done before August 14, 2012. Any transfer to a traditional IRA may be excluded from gross income in the tax year in which the airline payment was paid. The amount of any airline payment transferred (along with any income or loss) is deemed to have been contributed to the traditional IRA at the time of the initial rollover contribution to the Roth IRA. Any airline payment you rolled over to a Roth IRA would have been reported to you in box 2 of Form 5498 for the year of the rollover. To exclude those payments from gross income, you must amend your return (discussed earlier) for that tax year.
Deposit
For more information regarding any airline payments you may have received, see Form 8935, Airline Payment Report. This form would have been sent to you within 90 days following an airline payment, or by March 23, 2009, whichever was later. The form shows the amount of airline payments you received that would have been eligible to be rolled over to a Roth IRA. You can now use this form to determine the amount of any airline payments you would like rolled over to a traditional IRA as well as the tax year(s) you may need to amend to exclude up to 90% of airline payments from income.
taxmap/pubs/p590-016.htm#en_us_publink1000283864

Example.(p69)

Jack Maple, a qualified airline employee received $30,000 in total airline payments for the years 2005 and 2006. On April 10, 2009, Jack made a rollover contribution of $20,000 in airline payments to a Roth IRA. Jack would now like to transfer the $20,000 rollover contribution to the Roth IRA as a rollover contribution to a traditional IRA. Jack can transfer the entire $20,000 since it is less than $27,000 ($30,000 x 90%), the most that can be transferred to a traditional IRA. Also, since Jack has $10,000 in airline payments that were not rolled over to a Roth IRA, he can roll over up to $7,000 ($27,000 - $20,000) to a traditional IRA. Jack must contact the trustee of his Roth IRA to initiate the transfer of $20,000 to a traditional IRA along with any allocable income or loss. The Roth IRA account at the time of the transfer was valued at $25,000. The amount transferred to the traditional IRA is $25,000 ($20,000 + $5,000 in allocable income). This will all be done by the trustee. Jack would also like to exclude the $20,000 from his gross income. Jack refers to the Form 8935 he received in 2009 that shows $30,000 in total airline payments received, with $15,000 received in 2005 and $15,000 received in 2006. Jack chooses to exclude $15,000 from income for 2005 and $5,000 from income in 2006. Jack must file Form 1040-X by April 15, 2013, to receive any refund of taxes paid for 2005 and 2006.