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What You Report About Your Roth IRA on Your Tax Return

By Felix Thorpe · Retirement Accounts Writer

You don't report Roth IRA contributions or earnings on your annual tax return

The IRS does not require you to report your Roth IRA balance, contributions, or investment earnings on Form 1040 or any other tax form you file each year. This is one of the defining features of a Roth account—the money grows tax-free and you owe no federal income tax on the growth, so there is nothing to report to the IRS about what happens inside the account.

However, you do need to report a Roth conversion if you moved money from a traditional IRA or 401(k) into a Roth IRA during the year. You also need to report withdrawals in certain situations. The rules differ depending on whether you are taking out contributions (which you can always withdraw tax-free) or earnings (which may trigger tax and penalties if withdrawn too early).

Key Takeaways

  • Roth IRA contributions and earnings do not appear on your tax return in any year—the account is tax-free by design.
  • A Roth conversion from a traditional IRA or 401(k) must be reported on Form 8606, and you may owe income tax on the converted amount.
  • Withdrawals of contributions are never reported because you already paid tax on that money before depositing it.
  • Withdrawals of earnings before age 59½ and before the account is five years old trigger both income tax and a 10 percent penalty, and must be reported on Form 5329.
  • If you have both traditional and Roth IRAs, the pro-rata rule may apply to conversions, meaning some of the conversion is taxable even if you only converted Roth money.

When you must file Form 8606 for a Roth conversion

If you converted money from a traditional IRA, SEP IRA, SIMPLE IRA, or 401(k) into a Roth IRA during the tax year, you must file Form 8606 with your tax return. This form tells the IRS how much you converted and calculates how much of that conversion is taxable income.

The taxable portion depends on whether the money you converted was pre-tax or after-tax. If you converted $10,000 from a traditional IRA that held only pre-tax contributions, the full $10,000 is taxable income in the year of conversion. If you converted $10,000 from a traditional IRA that held $6,000 in pre-tax money and $4,000 in after-tax contributions, only the $6,000 portion is taxable.

Form 8606 is filed with your Form 1040. If you do not file it when you should have, you can still file it later, but the IRS charges a penalty. Filing it on time is simpler than dealing with the correction later.

Reporting early withdrawals of Roth earnings

If you withdraw earnings from your Roth IRA before you turn 59½ and before the account has been open for five tax years, you owe income tax on the earnings plus a 10 percent early withdrawal penalty. You report this penalty on Form 5329, which attaches to your Form 1040.

The five-year rule is tied to the tax year you opened your first Roth IRA, not the date you opened the account. If you opened a Roth IRA on December 15, 2023, the five-year period runs through December 31, 2027. If you opened one on January 5, 2024, the same five-year period applies—both accounts opened in 2023 or 2024 share the same five-year clock.

Contributions themselves are never subject to this rule. You can withdraw contributions at any time, at any age, without tax or penalty, and you do not report the withdrawal on your tax return. The penalty applies only to earnings.

The pro-rata rule and mixed IRA accounts

If you own both traditional IRAs and Roth IRAs, the pro-rata rule applies to any conversion you make. This rule treats all your traditional IRAs as a single pool for tax purposes, even if they are at different banks or have different names.

Suppose you have a traditional IRA with $90,000 in pre-tax contributions and a Roth IRA with $10,000 in after-tax contributions. You want to convert the $10,000 Roth IRA to a new Roth account. The IRS sees your total traditional IRA balance ($90,000) plus the amount you are converting ($10,000), and calculates that 90 percent of your IRA money is pre-tax. Therefore, 90 percent of the $10,000 conversion—$9,000—is taxable income, even though you only converted after-tax money.

This rule catches many people by surprise. If you have a large traditional IRA balance and want to do a Roth conversion, you may want to roll the traditional IRA into your employer's 401(k) plan first (if the plan allows it), which removes it from the pro-rata calculation. Form 8606 is where this rule plays out on your tax return.

Backdoor Roth conversions and Form 8606

A backdoor Roth is a strategy where you contribute after-tax money to a traditional IRA and then immediately convert it to a Roth IRA. The conversion itself is reported on Form 8606, just like any other conversion.

If you have no other traditional IRA balances, the entire conversion is tax-free because you converted after-tax money. If you do have other traditional IRAs, the pro-rata rule applies and part of the conversion becomes taxable. Many people do a backdoor Roth specifically because they earn too much to contribute directly to a Roth IRA, so they file Form 8606 to document that the conversion was after-tax money and therefore not taxable income.

Inherited Roth IRAs and reporting requirements

If you inherit a Roth IRA from someone other than a spouse, you must take required minimum distributions (RMDs) starting the year after the account owner died, even though Roth IRAs normally have no RMD requirement during the owner's lifetime. You report these distributions on your Form 1040 as taxable income only if you withdraw earnings before the five-year rule is satisfied—contributions are always tax-free.

If you inherit a Roth IRA from your spouse, you can treat it as your own, roll it into your own Roth IRA, or keep it as an inherited account. The reporting depends on which choice you make. Consult a tax professional if you inherit a Roth IRA, because the rules vary by your relationship to the deceased and the year of death.

State income tax and Roth IRAs

Most states do not tax Roth IRA distributions, but a few states tax all retirement account withdrawals or have specific rules about Roth accounts. Pennsylvania, for example, does not tax retirement income including Roth distributions. New Jersey taxes retirement income but exempts IRAs. A handful of states have different rules depending on your age or income.

Your state tax return is separate from your federal return. If you live in a state with an income tax, check your state's tax agency website or ask a tax professional whether Roth distributions are taxable in your state. Federal Form 8606 does not affect state reporting, but your state may require its own form if you had a conversion or large withdrawal.

Frequently Asked Questions

Do I have to report my Roth IRA balance to the IRS each year?

No. The IRS does not require you to report the balance, contributions, or earnings in your Roth IRA on any annual tax form. You only report a conversion (Form 8606) or an early withdrawal of earnings with a penalty (Form 5329).

What if I withdraw only my contributions from my Roth IRA?

Withdrawals of contributions are never reported on your tax return and never trigger tax or penalty, regardless of your age or how long you have owned the account. You can withdraw contributions at any time tax-free.

Do I need to file Form 8606 if I did not convert anything?

No. Form 8606 is only required if you made a Roth conversion during the year. Regular annual contributions to a Roth IRA do not require any form to be filed with your tax return.

What happens if I do a backdoor Roth but forget to file Form 8606?

The IRS may treat the conversion as taxable income on your account, even though it was after-tax money. You can file Form 8606 late to correct this, but you will owe a penalty. Filing it on time with your original return is much simpler.

Does a Roth conversion count as income for Medicare premiums or other benefits?

Yes. The taxable portion of a Roth conversion is counted as income for the year of conversion, which can affect your Medicare premiums, tax credits, and other income-based benefits. This is one reason some people spread conversions across multiple years.