Partial Roth Recharterizations
I have a client who did a Roth conversion and just found out his income was higher than he thought and wanted to stay in the lower tax braket – so he want to recharaterize some of the Roth conversion – I think this is OK – is it?
Thanks
Permalink Submitted by mk foss on Wed, 2008-12-31 18:32
Yes, he can recharacterize. If he converted in 2008 he has until October 15, 2009 which will give him sufficient time to determine his 2008 tax bracket.
Permalink Submitted by David J Chapman, CFP on Wed, 2009-01-07 14:13
So it is ok to recharacterize only a part of a Roth conversion? He does not want to do a full recharacterization – only about a quarter of what he initially converted.
Permalink Submitted by mk foss on Wed, 2009-01-07 18:10
You can recharacterize part of a Roth conversion. The important thing is IRS considers dollars converted not specific assets. For example, if the conversion was of 3 funds with a total value of $60,000 and he needs to recharacterize $15,000; $15,000 in value must be recharacterized as of the recharacterization date – you can’t merely recharacterize the fund that went down in value.