Recaracterization of a Roth
If someone transfers their IRA into a 24 month SPIA and then, as they receive the income, converts it to a Roth account. How long do they have to recharacterize back to a traditional IRA?
If someone transfers their IRA into a 24 month SPIA and then, as they receive the income, converts it to a Roth account. How long do they have to recharacterize back to a traditional IRA?
Permalink Submitted by Alan - IRA critic on Tue, 2013-01-15 17:40
Any Roth conversion can be recharacterized up to the extended due date, ie 10/15 of the year following the year of the conversion. Therefore, the recharacterization can be done shortly after the conversion or up 21 months later if the conversion is done very early in the year. Each conversion is separate so if a taxpayer gets 24 monthly payments, they may have up to 24 conversions to recharacterize. This scenario could also be a work around to the one rollover rule per IRA account. Converting avoids the one rollover rule per the tax code, so someone could use conversions and recharacterization to get around the one rollover rule.