Roth Recharacterization
I appologize for not being able to apply all the previous answers to my situation.
In 2006 and 2007, I converted a block of mutual fund shares to the same Roth account(not good!). I now wish to recharacterize the 2007 shares, which have had no dividends but condiderable loss, so they are easy to identify. I think this must be done by 10/15/08. Will this prevent me from converting other shares from the same mutual fund in the IRA for 2008? Will it prevent me from converting shares of other mutual funds from the same IRA which is the only one I have? Do previous conversions during 2008 from the TIRA already made and any before 10/15/08 affect the other questions?
Thanks for any info
Permalink Submitted by Alan Spross on Mon, 2008-10-13 22:26
Since the 2007 conversion went into an existing Roth, negative earnings for recharacterization will have to be based on the overall account results while the 2007 conversion was included.
You can do another conversion for a different amount than the 2007 conversion, but since time is running out, you will have to recharacterize first. It is best to do that do a new TIRA account so it is clear that you are not reconverting within 30 days, but doing a different conversion for a different amount.
If you have also done prior 2008 conversions, the earnings on those will also affect the calculation for your recharacterization. You can do as many conversions as you wish, but the key is making sure that none of them appear to be a disallowed reconversion of one of the recharacterizations. That is why you should recharacterize to a new account so you can show the IRS that those funds never got back into the original TIRA, so they could not have been reconverted.
Later on you can re combine the accounts if you wish, a couple years after these issues have passed. Meanwhile, you are very short of time and you need to call the IRA custodian ASAP so they have time to address this within only 48 hours.