Recharacterize to reopen up minimum deposit funds
I did 3 Vanguard managed funds IRA to Roth conversions in January. I made a mistake and closed the 3 funds in the IRA by moving everything out of the funds into the Roth. Because of my asset allocation being out of balance quite a bit I want to do some rebalancing. Seeing the 3 funds converted were at $0, Vanguard said only way I could open them back up was to recharacterize some of the January funds monies back into the IRA. Minimal amount the rep said which would reopen them. Question is[b] [u]if I recharacterize now to reopen the funds can I convert more into Roth before end of the year [/u][/b]when I know approximately where my 15% bracket threshold is at.
TIA Jack
Permalink Submitted by Alan Spross on Thu, 2009-10-15 01:47
You can’t reconvert recharacterized dollars of the same year until the next calendar year, and also 30 days from the recharacterization, whichever is longer.
But I cannot tell from your post whether you would be reconverting the same dollars or not. I also did not follow Vanguard’s comments, but perhaps you have no assets left in the TIRA now. Did you convert the funds themselves over to the Roth? That would not change your asset allocation. This could also reflect Vanguard’s account platform where certain investments must be in a mutual fund account and others in a brokerage account. But you should be able to have either type of account in a TIRA or a Roth IRA.
In any event, you probably should not recharacterize if your Roth has gains since January, because more will go back to the TIRA than you converted in the first place.
Permalink Submitted by John Keiler on Thu, 2009-10-15 14:36
Alan, thanks for your response and BTW your such a intregal part of this forum.
I’ll only be putting a $100 back into each of the 3 funds so the funds remain open in the TIRA. The original conversion in January amounted to a little over $40,000. The 3 funds are managed funds and to open these funds from the start would take a minimum deposit of $25,000 for each fund.
I’m assuming the the gains on each $100 back will go back also which shouldn’t be more than $15 to $20 dollars on each fund.
If I convert more this year I will do before I recharacterize what is talked about above.
Thanks again Alan………..Jack