2007 Roth IRA conversion: rechar & re-convert in 08 for
I did a partial Roth conversion in December 2007. I know I can recharacterize it before October 15, 2008. If I re-characterize it now, can I re-convert it now and still have it treated as a 2007 conversion?
Permalink Submitted by Alan Spross on Thu, 2008-08-07 20:54
No.
1) You have until 10/15 to recharacterize ONLY if you filed your 2007 return on time OR extended it on time.
2) If you recharacterize a 2007 conversion in 2008, you must wait 31 days after the recharacterization to do a reconversion of the same amount. The reconversion will be taxable in 2008 AND you must qualify to convert in 2008………
However, there is a loophole…….
as stated above you must wait 31 days to reconvert the same amount, but that does not stop you from converting a DIFFERENT amount. In fact, if you do the 2008 conversion prior to the recharacterization, it MUST be a different amount because your first conversion is still in the Roth at the time. If you want to proceed this way, make your 2008 conversion into a new Roth account to prevent confusion and complicated earnings calculations when you do the recharacterization.
Note: If you still want to have some 2007 conversion dollars, you do not have to do a full recharacterization of the conversion. You can do a partial recharacterization, although that will complicate your 2007 return somewhat. You are either on extension OR you will have to amend your 2007 return if you do either a full or partial recharacterization after filing it.