Can you recharacterize contributions after 4/15?

Submitted by abura98 on Tue, 2015-05-12 16:24

Note that I am specifically referring to recharacterizing annual contributions NOT conversions or rollovers which are specifically allowed until 8/15:
http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-IRAs-Recharacterization-of-Roth-Rollovers-and-Conversions

In IRS pub 590 it states:
“Recharacterizing excess contributions. You can recharacterize only actual contributions. If you are applying excess contributions for prior years as current contributions, you can recharacterize them only if the recharacterization would still be timely with respect to the tax year for which the applied contributions were actually made.

Example:

You contributed more than you were entitled to in 2014. You cannot recharacterize the excess contributions you made in 2014 after April 15, 2015, because contributions after that date are no longer timely for 2014.”

http://www.irs.gov/publications/p590a/ch01.html#en_US_2014_publink1000230671

So my question is as follows: If I make a 2014 Roth contribution before 4/15/15 and then want to recharacterize to Traditional, am I allowed to do so after 4/15/15 but before 8/15/2015? What if I filed for an extension – does that change anything?

Thanks!



Submitted by Jose Morales on Tue, 2015-05-12 17:09

http://www.irs.gov/publications/p590a/ch01.html#en_US_2014_publink1000230671

RecharacterizationsYou may be able to treat a contribution made to one type of IRA as having been made to a different type of IRA. This is called recharacterizing the contribution.To recharacterize a contribution, you generally must have the contribution transferred from the first IRA (the one to which it was made) to the second IRA in a trustee-to-trustee transfer. If the transfer is made by the due date (including extensions) for your tax return for the tax year during which the contribution was made, you can elect to treat the contribution as having been originally made to the second IRA instead of to the first IRA. If you recharacterize your contribution, you must do all three of the following.

  • Include in the transfer any net income allocable to the contribution. If there was a loss, the net income you must transfer may be a negative amount.
  • Report the recharacterization on your tax return for the year during which the contribution was made.
  • Treat the contribution as having been made to the second IRA on the date that it was actually made to the first IRA. 

Submitted by Alan - IRA critic on Tue, 2015-05-12 17:46

Recharacterizations or removal of excess contributions for most people can be done up until 10/15 of the following year, which is the extended due date. To qualify for the extended due date you either must file your return OR an extension by 4/15. The 8/15 date is not applicable to this situation.

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