Retirement Saver's Credit

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Retirement Saver's Credit

Postby nimo956 » Fri Feb 08, 2013 7:34 pm

My AGI was $28,950 in 2012. I contributed $5k to a Roth IRA in Jan 2012. Should I re-characterize it as a Traditional IRA to get the $200 saver's credit? Are there any downsides to doing this?
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Re: Retirement Saver's Credit

Postby crowd79 » Fri Feb 08, 2013 7:43 pm

Recharacterize just enough ($201) to a Traditional IRA to get below the $28,750 threshsold to claim a $200 credit if you already have a Traditional IRA. If you don't have Trad IRA, you will have to open a new Traditional account and recharacterize $1,000 if you open it through Vanguard, as that is their minimum account opening.

EDITED to add this thread: http://www.bogleheads.org/forum/viewtopic.php?f=2&t=110532&newpost=1608617
It does sound more complicated than I thought, you might be best served calling your broker with whom you have the Roth IRA with and do a recharacterization over the phone..
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Re: Retirement Saver's Credit

Postby grabiner » Fri Feb 08, 2013 8:57 pm

crowd79 wrote:Recharacterize just enough ($201) to a Traditional IRA to get below the $28,750 threshsold to claim a $200 credit if you already have a Traditional IRA. If you don't have Trad IRA, you will have to open a new Traditional account and recharacterize $1,000 if you open it through Vanguard, as that is their minimum account opening.


Alternatively, you could make a $1000 Traditional IRA contribution for 2013, and then recharacterize the 2012 contribution into the existing Traditional IRA.

(And you can always convert the Traditional IRA to a Roth in a later year if appropriate.)
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