Recharacterization of contribution to Rollover IRA
I meant to make a contribution to my ROTH IRA but when I sent the check to the custodian I wrote the account number for my Rollover IRA on the check. How can I recharacterize this contribution?
I meant to make a contribution to my ROTH IRA but when I sent the check to the custodian I wrote the account number for my Rollover IRA on the check. How can I recharacterize this contribution?
Permalink Submitted by Alan Spross on Wed, 2011-12-21 23:26
Just ask the custodian to recharacterize your TIRA contribution for 2011 as a Roth IRA contribution and they will make the change. But be sure your qualify for a Roth contribution first because you cannot recharacterize back if you are not eligible for the Roth or otherwise change your mind. In other words, you cannot recharacterize a recharacterized contribution.
Permalink Submitted by Jane Ackerman on Wed, 2011-12-21 23:36
Even if I recharacterize the contribution, do I have to report the original contribution to my Rollover IRA on my Form 1040? Do I need to fill out any additional paperwork?
Permalink Submitted by Alan Spross on Thu, 2011-12-22 00:47
There is no form to complete, but you should include an explanatory statement with your return, eg ” on xx/xx/2011 I contributed $y to my traditional IRA. On zz/zz/2011 I recharacterized the full contribution as a Roth IRA contribution, and it was valued at $jj at the time of recharacterization.”
Obviously, you would NOT deduct the TIRA contribution or file an 8606 for a non deductible contribution. The Roth contribution does not get reported on your return unless you are also filing an 8880.
Permalink Submitted by Jane Ackerman on Sat, 2012-01-07 18:46
Was the deadline for this recharacterization 12/31/11 or can I still do it before 4/15/12?
Permalink Submitted by Alan Spross on Sat, 2012-01-07 19:42
You have until 10/15/2012 to recharacterize the contribution if you either file for an extension OR file your 2011 return by 4/17. If you don’t do one of those two things, then you only have until 4/17/2012 to complete the recharacterization of the contribution.
It works best if you do the recharacterization before you file, because that allows you to include an accurate explanatory statement with the return regarding the recharacterization. Any earnings or loss incurred on your contribution will determine the amount that actually transfers to the Roth IRA.