Aargh, think I've totally screwed up...

[Anonymous]

Background: DH and I are in our 50's and have been saving for retirement in both 401k's and IRA's.
The problem? The IRA"s are in mutual funds and we have moved them from company to company and fund to fund periodically as the fund ratings change.
Also, we may have co-mingled nondeductible with deductible IRA's. (and this is going back ~30 years)
When we eventually retire and start withdrawing funds, how the heck will we know how much tax we owe on the proceeds?
I guess I will need all the dates that we made investments or dividends were reinvested, as well as all the dates we made changes, # of shares at those times, etc. It seems like an accounting nightmare to me! I've saved all our states and tax returns, but dread having to go back and figure everything out.
Is there any other way to deal with this other than tracking down all the investment records and tax returns and trying to sort it out that way?
Is there any software that could help with this?
Thanks in advance!

[Anonymous]

Are you saying that at some point you rolled over a regular IRA into a ROTH IRA without paying taxes on it at that time, or did this multiple times??

My best advice is to take the following steps:

1. Figure out what years you rolled over any regular IRAs into Roth IRAs.
2. Ignore the reverse - I don't think you would owe any additional taxes on ROTH-to-Regular conversions, or at least I don't know why you would since you'd be contributing after-tax dollars.
3. Take this to a reputable accountant (I have an accounting degree but am not an accountant) and file amended returns for the years where you identified making regular-to-ROTH conversions.

In each of those years, as long as it was legal that year to convert regular-to-ROTH, you should have paid additional taxes on those IRA balances as income. You might need to call the IRA as well and work with someone to try to get them to waive penalties since you're trying to correct an honest mistake. You should pay interest on those unpaid tax balances however - you've owed that money to our country since the mistake(s) happened.

In my opinion, that should make you legal.

[Anonymous]

Basically, for any ROTHs you have, you still shouldn't have to pay taxes on money you withdraw from them. However you need to go back and pay taxes on them when they were converted.

Otherwise, you might be able to get your investment company to simply recategorize them from ROTH back to Traditional so any distributions are taxed and reported again.

[Anonymous]

Anonymous wrote:Also, we may have co-mingled nondeductible with deductible IRA's. (and this is going back ~30 years)

Or do you have all your IRA funds in a Traditional IRA? I don't see any mention of a ROTH and I know Traditional contributions are usually discussed in terms of being non-deductible vs. deductible (based on income level). (All ROTH contributions are non-deductible.)

If you don't have to deal with the potential ROTH mess discussed by PPs, that would be one less thing to worry about......

[Anonymous]

Anonymous wrote:

Anonymous wrote:Also, we may have co-mingled nondeductible with deductible IRA's. (and this is going back ~30 years)

Or do you have all your IRA funds in a Traditional IRA? I don't see any mention of a ROTH and I know Traditional contributions are usually discussed in terms of being non-deductible vs. deductible (based on income level). (All ROTH contributions are non-deductible.)

If you don't have to deal with the potential ROTH mess discussed by PPs, that would be one less thing to worry about......

Yes, OP here, that is correct. We do have a Roth, but did not commingle any of the other accounts with that one.

I found this article online which seems to cover the deductible/nondeductible subject pretty thoroughly.

http://www.wallstreetinstructors.com/ce/continuing_education/ira/id69.htm

Uggh, it's going to take a lot of time to straighten this out!
Thanks for all the replies and advice.
If you know of any software that could help, I'd love to hear about it....but it sounds like I have to handle this problem the old fashioned way...multiple phone calls, perusing my boxes of old statements and tax returns and maintaining my patience! Wish me luck!