Roth IRA Contributions: Don't Report on Tax Return, But Do Keep Track
By Jeffery Levine, IRA Technical Expert
Follow Me on Twitter: @IRAGuru4EdSlott
If you made a Roth contribution for 2013 and are now preparing your tax return, you may be wondering where to report it.
Chances are, however, that if you’ve been looking, you’ve been looking for a while. It’s very difficult to find where these contributions are reported. Actually, truth be told, it’s impossible.
Believe it or not, you don’t have to report your Roth contributions anywhere on your tax return. That’s pretty surprising to most people, especially when you realize that deductible IRA contributions are reported on the 1040 … and even non-deductible traditional IRA contributions get reported on Form 8606. But Roth IRA contributions? Nowhere at all.
Here’s the thing, though. Just because you don’t have to report your Roth contributions to Uncle Sam doesn’t mean you don’t need to keep track of them. Roth contributions can always come out tax and penalty free. It doesn’t matter what your age is, how long the contributions have been in the account or what the reason is for the distribution. To repeat myself, they are always tax and penalty free.
Most professional tax software has a place to store this information, even though it doesn’t get reported to IRS, but not all do-it yourself software does. So if you’re preparing your own return, it’s best to keep a running total of your cumulative Roth IRA contributions with your tax file each year. And if you have a professional prepare your return, be sure to let them know you made a Roth IRA contribution. You may also want to double check and make sure they’re keeping track of your Roth IRA contributions somewhere. Since they don’t have to report them, some CPAs lazily don’t keep track of this information, which could cost you in the long run.
Now hopefully, you’re waiting until retirement to access your Roth IRA money, in which case, distributions of any Roth money will generally be tax-free, but that’s not always the case. Sometimes life throws you a curveball, and when that happens, you may need to access your Roth IRA money earlier than expected. If you’ve kept track of your Roth IRA contributions throughout the years, then you’re in good shape and you know how much money you can access without adding to your tax bill. If you haven’t kept track… well, good luck with that. Most people don’t remember what they had for breakfast, let alone what they contributed to a retirement account 5, 10, maybe even 15 years ago.
So don’t waste your time looking for a line on a tax return that doesn’t exist, but do make sure you don’t waste your money by not keeping track of this information somewhere safe.
Content Citation Guidelines
Below is the required verbiage that must be added to any re-branded piece from Ed Slott and Company, LLC or IRA Help, LLC. The verbiage must be used any time you take text from a piece and put it onto your own letterhead, within your newsletter, on your website, etc. Verbiage varies based on where you’re taking the content from.
Please be advised that prior to distributing re-branded content, you must send a proof to firstname.lastname@example.org for approval.
For white papers/other outflow pieces:
Copyright © [year of publication], [Ed Slott and Company, LLC or IRA Help, LLC - depending on what it says on the original piece] Reprinted with permission [Ed Slott and Company, LLC or IRA Help, LLC - depending on what it says on the original piece] takes no responsibility for the current accuracy of this information.
Copyright © [year of publication], Ed Slott and Company, LLC Reprinted with permission Ed Slott and Company, LLC takes no responsibility for the current accuracy of this information.
For Slott Report articles:
Copyright © [year of article], Ed Slott and Company, LLC Reprinted from The Slott Report, [insert date of article], with permission. [Insert article URL] Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article.
Please contact Matt Smith at email@example.com or (516) 536-8282 with any questions.