recharacteriztion repeal proposal
Both the House and Senate tax reform package proposes eliminating the ability to recharacterize an IRA contribution or Roth conversion
My question is regarding the effective date. In Ed’s December IRA newsletter he makes it clear (to me at least) should the proposal become law, 2017 Roth conversions would become permanent on December 31 2017. In other words you would lose the ability to recharacterize a late as tax filing plus extensions (generally 10/15/2018) for a conversion that took place in 2017.
I was under the impression that (if the provision becomes law) it would impact contributions/conversions beginning on 1/1/18 –
All help is appreciated
Thank you
Permalink Submitted by Alan - IRA critic on Sat, 2017-11-25 00:07
The way I read this is that a Roth regular contribution or conversion made for 2017 can still be recharacterized. If this passes as is, I would avoid doing a 60 day rollover conversion that is completed in 2018 just in case that becomes a problem. It appears that a TIRA regular contribution can still be recharacterized as a Roth contribution in the future, but an excess Roth contribution will have to be returned and re deposited as a new TIRA contribution if this is done by the due date.