Any limit on Roth IRA recharacterizations
Assets in a Roth IRA are recharacterized back to a traditional IRA and then reconverted back to a Roth IRA. Can those assets be recharacterized and reconverted again in a future year? Are there any limitations on the number of times that assets in a Roth IRA can be recharacterized and reconverted?
Permalink Submitted by Alan Spross on Wed, 2011-09-28 18:49
No, there is no limit to the number of conversions or recharacterizations for any time period. However, there is a waiting period for reconverting the same assets after recharacterizing them back to the TIRA. You indicated that the reconversion would be done in a future year, but there is also a 30 day waiting period if that is longer. Eg. 2011 conversion recharacterized on 12/15. Reconversion cannot be done until 1/14/2012.
I have often wondered if and when an IRA custodian might start charging a fee for excessive recharacterizations since some people have adopted strategies involving several conversions and recharacterizations. None of them want to be the first to make that move, but once someone starts the practice could accelerate.