establishing cost basis in non-deductible IRA accounts

Asked August 13, 2014, 4:49 PM EDT

I have made non-deductible IRA contributions to investment accounts for many years, but I never filed form 8606, and I do not have evidence that the contributions were made with after-tax dollars. Further, I don't have the records to show how much I contributed each year, although I know it was the maximum allowed for each year.. I do, however, have copies of all my tax returns that would reveal that no deductions were ever claimed or taken. I don't want to pay tax (again) on the portion that represents my cost basis when I start my RMDs in 3 years.
* Does the IRS require proof of the cost basis and gains at the time that I report these figures?
*What can I do to satisfy the IRS that all my contributions were non-deductible? *How can I avoid paying double taxes on the cost portion of my IRA account?

Oneida County New York

1 Response

You should have filed a 8606 Form for each of the years that you made a non-deductible Traditional IRA contribution. The 8606 form establishes that your contribution was made with after-tax dollars, thus preventing the "double taxation" issue that you refer to when you have to start taking RMD withdrawals. Having copies of your past tax returns will help document your past investing actions, as would all your annual account statements for your IRA. Gather whatever documentation you have and see a tax advisor for suggestions about what to do to satisfy the IRS. This link has all the previous annual maximum IRA contribution limits: