GW, you are correct about the deadline.

The deadline for recharacterizing both regular contributions and conversions is 10/15 following the effective year of the contribution or conversion. And that only applies if the return was either filed or extended by 4/15 of that year. The title of the account as contributary or conversion is immaterial, what counts is the actual type of contribution and whether it is permitted. Form 5498 shows how the custodian reported the contributions to the taxpayer and to the IRS.

Therefore, the accountant is incorrect, and only the 2007 contribution can still be recharacterized to a (likely) non deductible TIRA contribution by 10/15/08. It can also simply be withdrawn. Either way, an earnings calculation must be done to determine the exact amount that would be withdrawn or migrate to a TIRA in the event the 07 contribution is recharacterized within two weeks.

For the 05 and 06 excess contributions, these must be corrected by requesting a regular distribution of the contributions made, with NO adjustment for earnings. This would be reported as an early distribution and in most cases it would be tax free as a return of contribution. However, a 6% excise tax will be due for 05, 06, and 07 as follows:
1) For 05 Form 5329, 6% of the 05 contribution.
2) For 06 Form 5329, 6% of both the 05 and 06 contributions.
3) For 07 Form 5329, same as 2) above.

The IRS will also likely levy interest on those 6% excise taxes as they are being paid late.

The 05 and 06 amounts distributed in 2008 will be reported on Form 8606 for 2008 and the 2007 corrective action will be reported on the 2007 return or amended return. Finally, there will be 5329 due for 2008 as well, but it will show that all prior excess contributions have been withdrawn, and no taxes will be due for this 5329.

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