Yes. Seriously. I may (but probably won't) have to do that myself. But, if my income is above the limit, I'll still be in phase-out territory - in that case, you only have to recharacterize the portion that you weren't entitled to put into the Roth. Anyway, however much you recharacterize, whether it's the full $5000 or a portion thereof, you would end up doing Roth --> traditional --> Roth + pay the taxes.
I previously did this the last time my income was high enough to get into the Roth phase-out limits, but this was before they removed the income limits on Roth conversions. So I had a few years where the money sat in the traditional IRA until they changed the law.
Edit: ignore bit about not waiting to reconvert, as it is corrected below by Epsilon Delta.
It does feel fishy. But then the whole "backdoor Roth" thing still feels fishy to my mind. I mean, it's a neat trick - choose whether to pay the tax now or on withdrawal, and when I put it like that, it doesn't SEEM fishy. But, still. I know what you mean. However, once you include the step of "pay the taxes" it makes a BIT more sense.
Last edited by englishgirl
on Fri Dec 28, 2012 10:25 pm, edited 1 time in total.