Roth Recharacterization

Submitted by Brian Kuhn on Mon, 2018-04-02 16:03

Is it accurate that Roth conversations done in calendar year 2017 can still be re-characterized back into an IRA? What happens if the person withheld taxes when they did it? And Roth conversation going forward from January 1st can not be re-characterized?



Submitted by Alan - IRA critic on Mon, 2018-04-02 17:36

  • Yes, a 2017 conversion can still be recharacterized in 2018 up to the extended due date. Any conversion done in 2018 and beyond cannot be recharacterized, so conversions being completed now need to be more carefully planned. 
  • Normally taxes should not be withheld from a conversion distribution because the amount of tax is lost to either IRA account. The amount that was converted in 2017 can still be recharacterized but the tax withholding remains on account at the IRS. Once the 2017 return is filed, any excess taxes paid in will be paid back as a tax refund for 2017. 

Submitted by Brian Kuhn on Mon, 2018-04-02 18:22

Does the money need to be at the same custodian where the conversion was done when the recharacterization is processed? 

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