Loss on recharacterization
Early in 2008 I accidentally put $5000 into my regular IRA, but intended it for my ROTH. When I had the money transferred to my Roth it was only worth $2900 and that was the amount of the recharacterization. Can I now put $2100 more into the Roth to get back up to $5000 for 2008?
Thanks,
Doug
Permalink Submitted by Alan Spross on Thu, 2008-12-11 04:52
Yes, but it is a two step process. You cannot simply add to the contribution.
First, you must request a return of contribution from the Roth IRA, and this is handled like an excess contribution. The earnings will have to be calculated on the contribution, and that will be a challenge since it will have to include the time spent in each type of IRA. You would get back the reduced amount caused by the investment losses. Be sure you ask the custodian to handle this as a return of contribution and not a normal distribution.
Then, you can make another full Roth contribution and the IRS will only look at this as having made one contribution.