Allowable income to convert to a ROTH
I must have missed some info in converting my TIRAS to ROTHS. What I read was that as long as your income was less than 165000 and married filing jointly that you can convert the TIRAS. I do my turbo tax program and they say because my modified adjusted gross income is above 100000 I can’t convert my TIRAS. Have I missed something in the literature somewhere? If I have, then I need to convert my ROTHS back to TIRAS before April 15 of this year,right? Any help would be gladly appreciated.
Permalink Submitted by Anonymous (not verified) on Tue, 2010-02-23 16:14
Contribution limits are different from converting limits (which is the MAGI 100K).
You can recharacterize up until Oct. 15, 2010 as long as you file or file for an extension by April 15. If you file on April 15 without reporting the recharcterization you must file an amended return.
http://www.irs.gov/publications/p590/ch01.html#en_US_publink1000230658
pko
Permalink Submitted by Alan Spross on Tue, 2010-02-23 16:16
Apparently you confused the income limits for regular Roth contributions with the limit for conversions. The tax program is correct, so you must recharacterize the conversion no later than the extended due date of 10/15/2010. The extended due date only applies if you either file your return on time or file a timely extension by 4/15. However, there is no reason to delay the recharacterization. You can usually get the recharacterization done in a few days including time to mail in the form as many custodians require. The custodians will normally calculate the earnings or loss on your conversion, but are not required to.
After this is done, you will not have to file an 8606 to report the conversion, but will either have to include an explanatory statement for the IRS or the substitute 1099R TTax requires will probably suffice. If you re convert this year now that the income limit is permanently gone, you must wait until the 31st day following your recharacterization date, or it will be a disallowed reconversion. And conversions done this year do not require the conversion income to be reported until 2011 and 2012, 50% in each year. So unless you had a low bracket or alot of gain on your conversion, you may be better off.