In order to utilize non-deductible contributions you must file a 8606 for each tax year for which a non-deductible contribution was made starting the first year. They are accumulative meaning that each 8606 shows the new contribution for that tax year and the total of all prior years non-deductible contributions not yet utilized. Any tax year there there was neither a non-deductible contribution or distribution does not need a new 8606 - the last filed 8606 remains in effect. Any distribution will reduce the total non-deductible contributions by the ratio of non-deductible contributions and the total remaining value of all existing Traditional IRA accounts at year end.
Any non-deductible contribution not reported on a 8606 cannot be applied to distributions and is forfeited. There is also a $50 penalty for each missed 8606 form that the IRS can waive if good reason for missing the 8606.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
