Recharcterization
Good Afternoon –
Fact Pattern:
Account owner over contributed to his Roth IRA by $1500
He was only eligble to $3500 based on his household income
He was instructed to recharacterize $1500 + earnings to a T-IRA; followed by a reconversion to a Roth
Questions
Can he reconvert immediately? or does he have to wait more than 30 days?
Thank you,
Brian
Permalink Submitted by Alan - IRA critic on Fri, 2013-01-25 22:11
There is no waiting period after a recharacterized regular contribution as there is for a recharacterized conversion. Therefore he could convert back to the Roth IRA right after the recharacterization. However, the conversion will only be tax free if there are no other pre tax balances in other non Roth IRAs he has. The earnings will also be taxable upon conversion, ie the amount the recharacterized contribution exceeds 1,500.