Monday October 15, 2012 was the deadline to recharacterize an IRA contribution for 2011. Now that we are past that date, is it possible to get an extension for time to do a recharacterization?
Probably not.When you recharacterize, you essentially change your IRA contribution from one type of IRA to another. In most cases, a recharacterization involves reversing a Roth IRA conversion. Some or all of the conversion can be recharacterized with its net income attributable (gains or losses). A recharacterization can be done for any reason but certain rules must be followed. For example, both
Individuals who did Roth conversions in 2010 and took advantage of the opportunity to spread the income over 2011 and 2012 are now faced with the tax bill for income that must be included on their 2011 tax returns. Many are now having second thoughts or are having difficulty coming up with the funds to pay the tax.
Private letter rulings (PLRs), are written decisions by the Internal Revenue Service (IRS) in response to taxpayer requests for guidance. A private letter ruling binds only the IRS and the requesting taxpayer and may not be cited or relied upon as precedent by other individuals. However, if the subject matter addressed in a PLR has broad application to the general public, the IRS can redact its text and reissue it as a revenue ruling, which becomes binding on all taxpayers and the IRS.
