conversion…..recharacterize strategy
I have a client who converted 90k of a fund early in 2008….he now wants to convert another 40k….130 for the year and take advantage of recharacterize the first one to save taxes on the losses……what is the best way to execute this transaction sequentially
my client wants to recharacterize first, then do additional conversion. Once the recharacterization occurs, aren’t additional conversions for the 2008 tax year not possible? ie..later of 30 days or following tax year
Permalink Submitted by Alan Spross on Tue, 2008-10-28 20:12
Additional conversions are not necessarily disallowed reconversions if done in an way to clearly show that the additional conversions were both different amounts and funded by other funds than recharacterized conversion funds.
One obvious way to do that is to do the additional conversions prior to recharacterizing. However, if that is not done, the recharacterization should be made to a different TIRA account than the one that is funding the additional conversions. If the funds never go back into the original account, the additional conversions cannot be reconversions. The additional conversions should also be for a different dollar amount than other prior conversions. In that way, it should be clear that there was no disallowed reconversion made, just multiple conversions in the same year.