Recharacterization two separate years
Client converted a private equity investment in his TIRA to a Roth IRA in 2010. In 2011, made several additional additional conversions to the Roth IRA. Now wants to recharacterized the entire Roth IRA. Any special concerns about recharacterizing a Roth where contributions were made from two separate tax years?
Permalink Submitted by Alan Spross on Wed, 2011-09-14 20:16
No special concerns.
Each individual conversion can be partially or fully recharacterized and must include an individual earnings calculation. The 2010 recharacterization will show on a 1099R coded “R”. The total of the 2011 recharacterizations will show on a different 1099R coded “N” if these are completed in 2011.
If the Roth account held only these conversions, it would have a -0- balance after the final recharacterization if all recharacterizations were for the full converted amounts.
Of course, these transactions should be reported on tax returns (or amended return if applicable) including explanatory statements. But it really does not matter if they are done at the same time or different times. Reconversion waiting periods must be observed for any planned reconversions of the same assets.