My husband rolled over his company 401k to a Fidelity Ira. He rolled over his pretax and after tax money.?

Question

At the time Fidelity told us that if he did not take a distribution on the after tax money, he would need to file a form 8606 every year with our tax return. This was done in May of 2006. Turbo tax did not prepare the 8606. Do we need to file this form in the year of the rollover or not until the next year. Turbo Tax support does not have an answer. We are both over 65 and retired.

Answer 1

The 8606 is necessary to keep your taxed and untaxed portions separate. The taxed portion is referred to as basis.
You will want to do this so when you draw down the IRA you don't pay taxes on the portion that you have already paid taxes on.
Terrific grammar, huh?

Answer 2

You have to file the form each year to keep the character of the after-tax money as after-tax.