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When a distribution is made from a conventional, SEP, or SIMPLE IRA that contains after-tax funds, Form 8606 must be submitted annually.
If Form 8606 is not submitted, the individual may be responsible for paying income tax and an early distribution penalty on sums that are supposed to be tax and penalty-free.
One of the things that a lot of people don't know about IRAs is that they allow qualifying plan account holders to roll over after-tax assets to regular IRAs.
Form 8606 is not necessary for the year in which you roll over nontaxable monies from a qualified retirement plan to a regular IRA, according to IRS Publication 590-A. In such cases, Form 8606 must be filled out for the year in which the payout from the IRA was received.
For your records, it might still be a good idea to complete the form.
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