How does one recharacterize Roth IRA to traditional IRA ???

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How does one recharacterize Roth IRA to traditional IRA ???

Postby rocket » Thu Feb 07, 2013 2:02 pm

How does one recharacterize Roth IRA to traditional IRA ???
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Re: How does one recharacterize Roth IRA to traditional IRA

Postby SSSS » Thu Feb 07, 2013 2:07 pm

You can't recharacterize an IRA itself, but you can recharacterize a contribution in some circumstances. What company are you talking about? You'll probably have to call them. I don't think I've seen online recharacterization anywhere.

http://www.bogleheads.org/wiki/IRA_recharacterization
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Re: How does one recharacterize Roth IRA to traditional IRA

Postby Default User BR » Thu Feb 07, 2013 2:13 pm

rocket wrote:How does one recharacterize Roth IRA to traditional IRA ???

As noted, it's the contribution not the account. The process varies by custodian. Contact them to find out the details.


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Re: How does one recharacterize Roth IRA to traditional IRA

Postby rocket » Thu Feb 07, 2013 7:51 pm

SSSS wrote:You can't recharacterize an IRA itself, but you can recharacterize a contribution in some circumstances. What company are you talking about? You'll probably have to call them. I don't think I've seen online recharacterization anywhere.
http://www.bogleheads.org/wiki/IRA_recharacterization


Feb 2012 make contribution to Roth IRA for 2012. I would like to change that the Feb 2012 Roth contribution to a traditional IRA for 2012. This IRA is with mighty Vanguard.
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Re: How does one recharacterize Roth IRA to traditional IRA

Postby Alan S. » Thu Feb 07, 2013 8:59 pm

Why do you want to recharacterize the Roth contribution?
1) Modified AGI too high to qualify?
2) Would rather have the TIRA deduction? But are you sure you can deduct it?
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Re: How does one recharacterize Roth IRA to traditional IRA

Postby Default User BR » Fri Feb 08, 2013 2:22 pm

rocket wrote:This IRA is with mighty Vanguard.

I believe others have stated that Vanguard will do recharacterizations over the phone, but you should check.


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Re: How does one recharacterize Roth IRA to traditional IRA

Postby keystone » Fri Feb 08, 2013 2:36 pm

I did a recharacterization from Roth IRA to Traditional IRA with Vanguard a few years ago after I got married and didn't realize this was going to push me over the AGI limit for Roth conversions (which have since been lifted).

My first thought was that it was going to be a pain to figure it all out, because not only do you need to back out the Roth contribution amount, but you also need to factor in gains or losses. Then I called Vanguard and explained my situation. It was very straightforward. I told them what happened and they took care of the rest.

So my advice is to just call them up and tell them what you need.
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Re: How does one recharacterize Roth IRA to traditional IRA

Postby JordanIB » Fri Feb 08, 2013 4:04 pm

keystone wrote:I did a recharacterization from Roth IRA to Traditional IRA with Vanguard a few years ago after I got married and didn't realize this was going to push me over the AGI limit for Roth conversions (which have since been lifted).

My first thought was that it was going to be a pain to figure it all out, because not only do you need to back out the Roth contribution amount, but you also need to factor in gains or losses. Then I called Vanguard and explained my situation. It was very straightforward. I told them what happened and they took care of the rest.

So my advice is to just call them up and tell them what you need.


Did you have to fill out the long paper form? This is the 2nd post I've seen recently that references calling and having them "take care" of it. In the past, I've filled out the paper form and mailed/faxed it in. Is this no longer necessary? I can simply call and tell them to re-characterized $x of 2012 Roth contribution to TIRA?
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Re: How does one recharacterize Roth IRA to traditional IRA

Postby keystone » Fri Feb 08, 2013 4:28 pm

Sorry, it was over 3 years ago for me. I am pretty sure there was no fax/mail involved. My recollection is that I called them up and the transaction was done a few days after that. It is possible there was some type of electronic approval, but I don't remember any of that. I just remember the process was much easier then I expected.
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Re: How does one recharacterize Roth IRA to traditional IRA

Postby Alan S. » Fri Feb 08, 2013 5:05 pm

The mechanics vary by custodian. Many custodians want a record of the request because recharacterizations of regular contributions cannot be reversed and they don't want any misunderstandings. It's not always just the amount you want recharacterized, but you have a choice of investments to use in the transfer and the custodian needs to know which investments you want moved to equal the required amount after they calculate the allocated earnings. You can of course also do partial recharacterizations.
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Re: How does one recharacterize Roth IRA to traditional IRA

Postby rocket » Fri Feb 08, 2013 7:53 pm

Alan S. wrote:Why do you want to recharacterize the Roth contribution?
1) Modified AGI too high to qualify?
2) Would rather have the TIRA deduction? But are you sure you can deduct it?


I do not know about AGI being too high. I would like to get a IRA deduction and get a $1250 higher refund.
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Re: How does one recharacterize Roth IRA to traditional IRA

Postby grabiner » Fri Feb 08, 2013 9:00 pm

rocket wrote:
Alan S. wrote:Why do you want to recharacterize the Roth contribution?
1) Modified AGI too high to qualify?
2) Would rather have the TIRA deduction? But are you sure you can deduct it?


I do not know about AGI being too high. I would like to get a IRA deduction and get a $1250 higher refund.


Since you are in the 25% tax bracket, you shouldn't have a problem with AGI too high; the limit for direct Roth contributions is usually in the 28% bracket.

If you have a retirement plan at work (401(k), pension, etc), check the income limits; you can only deduct an IRA contribution if your income is below a certain level, and a Roth IRA is always better than a non-deductible IRA.

If you don't have a retirement plan at work, then your IRA contribution is always deductible.

Note that the $1250 is not a free lunch; you'll pay tax when you withdraw from the Traditional IRA, while you would probably not pay tax when you withdraw from the IRA. (It may still be a good deal, as you might lose only 15% of the Traditional IRA to taxes, while you are in a 25% tax bracket now.)
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