Definitions — Instruction 8606 — Instructions for Form

This section contains the following definitions.

IRAs Generally .
Deemed IRAs .
Traditional IRAs .
Roth IRAs .
SEP IRAs: Traditional and Roth .
SIMPLE IRAs: Traditional and Roth .
Special Terms .

IRAs Generally An IRA is an individual retirement account or an individual retirement annuity.

An individual retirement account is a trust or custodial account set up in the United States for the exclusive benefit of you or your beneficiaries. The account is created by a written document showing the account meets certain requirements.
You can open an individual retirement annuity by purchasing an annuity contract or an endowment contract from a life insurance company. An individual retirement annuity must be issued in your name as the owner, and either you or your beneficiaries who survive you are the only ones who can receive the benefits or payments. An

2 Instructions for Form 8606 (2025)

individual retirement annuity must also meet certain other requirements.

See Pub. 590-A for additional information on individual retirement accounts and individual retirement annuities. An IRA can be a traditional IRA, traditional SEP IRA, traditional SIMPLE IRA, Roth IRA, Roth SEP IRA, or Roth SIMPLE IRA. In general, individuals may make their own contributions to their traditional IRAs, traditional SEP IRAs, Roth IRAs, or Roth SEP IRAs. However, certain employers have arrangements under which the employer may contribute to traditional SEP IRAs or Roth SEP IRAs of their employees. As for traditional SIMPLE IRAs and Roth SIMPLE IRAs, only employers can make contributions to those IRAs.

traditional IRA may be fully deductible, partially deductible, or completely nondeductible.

Basis. Your basis in traditional IRAs is the total of all your nondeductible contributions and your nontaxable amounts included in rollovers made to these IRAs minus the total of all your nontaxable distributions, adjusted if necessary (see the instructions for line 2, later).