IRS Releases 2023 Instructions for Form Central to IRA Reporting

The IRS has updated the instructions for Form 8606, which is used to report contributions and distributions, as well as conversions, from IRAs—including Roths. 

Form 8606, Nondeductible IRAs, is used to report: 

• Nondeductible contributions to traditional IRAs; 
• Distributions from traditional, traditional simplified employee pension plan (SEP), or traditional SIMPLE IRAs; 
• Conversions from traditional, traditional SEP, or traditional SIMPLE IRAs to Roth, Roth SEP, or Roth SIMPLE IRAs; and 
• Distributions from Roth, Roth SEP, or Roth SIMPLE IRAs. 

Adjustments for 2023 Reporting

The IRS has made changes to the instructions for Form 8606 to explain terms and information requested in light of developments arising due to recently enacted legislation, as well as rates that are adjusted and relevant to the information the form requests and provides. 

SEP IRAs and SIMPLE IRAs. Beginning Jan. 1, 2023, it became possible to create Roth accounts for SEP IRAs and SIMPLE IRAs as Section 601 of the SECURE 2.0 Act provides. Accordingly, in the instructions for Form 8606, the IRS now refers to what it had called “SEP IRAs” as “traditional SEP IRAs,” and what it had referred to as “SIMPLE IRAs” as “traditional SIMPLE IRAs.” In addition, it now refers to newly enacted Roth accounts as “Roth SEP IRAs” and “Roth SIMPLE IRAs.” 

Corrective distributions. The 10% additional tax on early distributions does not apply to corrective IRA distributions made on and after Dec. 29, 2022.  

Modified AGI limit for Roth IRA contributions. Contributions can be made to a Roth IRA for 2023 only if the 2023 modified adjusted gross income (AGI) for Roth IRA purposes is less than: 

• $228,000 if married filing jointly;
• $228,000 if a qualifying surviving spouse; 
• $153,000 if single, head of household, or married filing separately and did not live with a spouse at any time in 2023; or 
• $10,000 if married filing separately and lived with a spouse at any time in 2023. 

Due date for contributions. For most people, the due date for making contributions for 2023 to an IRA is Monday, April 15, 2024.

Coronavirus-related distributions. Coronavirus-related distributions cannot be made after Dec. 30, 2020; accordingly, they do not appear on the 2023 Form 8606 nor in the instructions.