Recharacterization
I fully recharacterized a Roth IRA contribution for the 2021 tax year to a Traditional IRA contribution for the 2021 tax year. I also did a Roth Conversion in 2021. How should this be handled when I prepare my 2021 income tax return? Thanks.
Permalink Submitted by Bill Briner on Thu, 2022-03-10 16:18
If I have a retirement plan at work and our married filing jointly income is $192,000, then am I correct that there is no advantage in recharacterizing my Roth contribution to a Traditional IRA? If so, can a recharacterization from Roth to Traditional be reversed back to a Roth prior to submitting our 2021 income tax return?? Thanks.
Permalink Submitted by Alan - IRA critic on Thu, 2022-03-10 23:18
A modified AGI of 192,000 is low enough to permit you both to make a full 2021 Roth contribution. But since you recharacterized it as a TIRA contribution, your MAGI is too high to deduct that contribution if you are participating in a workplace plan. And you cannot reverse a recharacterization (back to Roth) so if you still want to make a Roth contribution, you must request the now TIRA contribution to be returned to you. Then you would make a new 2021 Roth contribution. Before taking further action, be sure that you are using modified AGI to detemine your income, not straight AGI.
Permalink Submitted by Bill Briner on Sat, 2022-03-12 14:06
Thanks Alan!