Roth reconversion
What is the time line for a Roth reconversion? In May 2008 I did a partial IRA to Roth conversion. The value of that conversion is now approx 25% less than in May. I want do a recharacterization now and then a reconversion. My understanding is that if I reconvert the [u]same dollar amount [/u]as in May, and out of the same IRA, it’ll be a failed conversion unless I wait until 2009. However if I convert (or is it still called a reconversion??) [u]a DIFFERENT amount [/u]but from the same IRA, that is acceptable without a time factor interfering
(other than 12/31/2008). My thinking is that the recharacterization wiped out the first conversion entirely. My next conversion (or reconversion??) is for a different amount and would be treated as a separate an distinct conversion. Would someone please clarify for me if any of the statements above are wrong.
Permalink Submitted by Alan Spross on Mon, 2008-10-06 23:57
You are basically correct. You need to avoid the perception that you are doing a reconversion in the same year. The simplest way to do that is to do your second conversion PRIOR to the recharacterization, of course into a different Roth. And make it for a different amount as well.
If you have reason not to do it that way, another option is to recharacterize the first conversion to a different TIRA account, so those funds can be tracked and do not get back into the original TIRA that will provide funds for the second conversion until after the time deadlines have passed.