I made nondeductible IRA contributions. What happens on Form 8606 if I roll my 401(k) into that IRA?

By Kaz · Published 6 October 2026 · How this site checks figures

Summary

Nothing changes on Form 8606 in the year of a pretax rollover, and your basis, the after-tax money you already put in, is not lost. What changes is the denominator: the rollover raises the year-end value of your traditional IRAs, so every later withdrawal or conversion carries a smaller tax-free share until the basis is used up. If the 401(k) also held after-tax money, the IRS says Form 8606 isn't used for the rollover year either, so the record of that basis is up to you until the first withdrawal.

Example: $20,000 of basis, before and after a rollover

Example: over several years you made $20,000 of nondeductible contributions to a traditional IRA, now worth $30,000. You roll a $170,000 pretax 401(k) into the same IRA. The next year you withdraw $10,000. To keep the arithmetic readable, the values don't grow.

Form 8606 line	Without the rollover	With the rollover
Line 3, total basis	$20,000	$20,000
Line 6, year-end value of all traditional IRAs	$20,000	$190,000
Line 7, distributions	$10,000	$10,000
Line 9, line 6 + line 7 (+ line 8, conversions, here $0)	$30,000	$200,000
Line 10, line 3 ÷ line 9	0.667	0.100
Tax-free part of the $10,000	$6,667	$1,000
Taxable part	$3,333	$9,000
Basis carried to next year (line 14)	$13,333	$19,000

The rollover itself caused no tax. The basis is still there, $19,000 of it, and comes out tax-free a little at a time with each later withdrawal. It just comes out much more slowly. Line 6 counts all traditional, SEP and SIMPLE IRAs together, so a rollover into a separate new IRA gives the same result as one into the old account.

The same fraction applies to a Roth conversion, which is why this matters most to people who use the backdoor Roth. The page on rollovers and the backdoor Roth works through that case.

Getting the basis away from the pretax money

The law gives one way to separate them. Under section 408(d)(3)(A)(ii) of the tax code, a rollover from an IRA into a workplace plan can't exceed "the portion of the amount received which is includible in gross income." Section 408(d)(3)(H) then treats the part rolled into the plan as coming from income first, rather than pro rata. Put together, only pretax IRA money can move into a 401(k), and moving it leaves the basis behind.

Using the numbers above: if your current employer's plan took $180,000 from the IRA, the $20,000 left would be all basis, and line 10 would come out at 1.000 the next time you withdrew or converted. The Form 8606 instructions also say not to include, on line 6, "an outstanding rollover from a traditional IRA to a qualified retirement plan."

The catch is the plan. It doesn't have to accept rollovers from IRAs at all. Moving IRA money into a 401(k) covers which plans do and what to ask.

After-tax 401(k) money rolled into the IRA

If your 401(k) had after-tax contributions and some of them went into the traditional IRA, they add to basis. The Form 8606 instructions define basis as "the total of all your nondeductible contributions and your nontaxable amounts included in rollovers made to these IRAs," minus tax-free distributions already taken.

The trap is timing. IRS Publication 590-A says: "A Form 8606 isn't used for the year that you make a rollover from a qualified retirement plan to a traditional IRA and the rollover includes nontaxable amounts. In those situations, a Form 8606 is completed for the year you take a distribution from that IRA." That could be decades later. The figure you'll need comes from the plan's Form 1099-R for the rollover year, which shows the after-tax amount in box 5, so that form belongs with your tax records for as long as the IRA exists. Which tax forms arrive after a rollover explains what each one reports. The IRS also allows a different route in the same distribution, after-tax dollars straight to a Roth IRA, which keeps them out of this calculation entirely; it is described in splitting after-tax and pretax 401(k) money.

Years you still have to file

A rollover year with no new nondeductible contribution and no withdrawal needs no Form 8606. A year with a nondeductible contribution does, and the 2025 instructions set a $50 penalty for not filing it "unless you can show reasonable cause," and a $100 penalty for overstating nondeductible contributions, with the same reasonable-cause exception. A year with any withdrawal or conversion from an IRA that has basis needs one too, because that is the only place the tax-free share gets worked out. The basis can sit in the account for years before it is used, and the fee calculator shows what annual fees take from a balance such as the $190,000 in the example over that time.

Sources

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