recharaterization
I recently opened a Roth IRA for 2012 on March 30, 2013 then realized that I need a traditional IRA for tax purposes. If I recharacterize prior to filing on April 15, will that involve a fee and penalty? I could not get a clear answer from Wells Fargo where I opened the account.
Permalink Submitted by Alan - IRA critic on Mon, 2013-04-15 16:53
If you recharacterize your 2012 Roth contribution as a TIRA contribution, there is no tax or penalty. However, before doing so be sure that your income is not too high to deduct that TIRA contribution. If you either file your return by today or file an extension, then you have until 10/15 to recharacterize the contribution. You should probably file an extension since you will not be able to include the explanatory statement with your return regarding your recharacterization if you file your return before the recharacterization.