Recharacterization of Roth conversion from 401k
Our client rolled his traditional 401k directly into a Roth IRA in 2015. The value of the Roth dropped and he wants to recharacterize the Roth. Since there is no IRA for him to recharacterize the Roth to, is it possible to perform the recharacterization?
Permalink Submitted by Alan - IRA critic on Fri, 2016-02-05 00:05
Sure. He needs to open a TIRA and then have the qualified Roth rollover recharacterized into the TIRA. If there was any after tax contributions included in the Roth rollover, he would also file an 8606 for the TIRA to record the amount of basis rolled into the Roth. That amount would show on the 1099R sent by the 401k plan. The recharacterization is therefore handled just like any other Roth conversion recharacterization and is subject to the usual waiting period before reconverting. That waiting period would be 30 days after the recharacterization transfer since this was a 2015 rollover.