On Friday I finished working on the tax return, or so I though [View all]

Cannot submit it yet, said TurboTax on the web, the IRS is not ready to accept one form. Until Feb. 15 (I hope).

And the form is: why? the 8606, of course. The one that we have to file for the rest of our lives because when we rolled our 401K from a former employer to an IRA, one agent did not alert us about the "after tax" part. In the employer reports that sum was labeled as "pre 1987" contributions.

Since these are individual accounts, we each had to do our own rollover with different agents. One of them, converting mine, immediately said that my after tax would be cashed out. My spouse's was not. Yes, with the mighty Vanguard.

It was some years later when we wanted to take the money out and I really did not believe the CPA so I called the IRS. These were the days when IRS agents did spend as much time as needed with a caller - at least in the summer. That agent was adamant: cash the after tax amount, buy a car, get on a cruise, don't roll it over. While the employers do keep tabs on that amount, once you roll it over it is all mixed together.

Why, then, I asked, is this not publicized? Because, he admitted, there are not that many who are in this situation. (Unless, I suppose, people do mix them..)

I really feel sorry for the IRS employees. First, every year, congress waits for the last minute to make some changes. And now, this tax "reform" also came by the end of the year and the poor IRS employees have to rush to, at least, give employers their new tables for withholding.


Wanted to add: form 8606 is used when one takes money from IRA - as when it is time for Required Minimal Withdrawal after the age of 70 1/2.