Retirement Saver's Credit

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills

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?
25% S&P 500/ 25% 30 year US Treasury Bond/ 25% Gold/ 25% Cash
nimo956
 
Posts: 462
Joined: Mon Feb 15, 2010 7:07 pm

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..
crowd79
 
Posts: 614
Joined: Sun Nov 18, 2012 11:37 pm

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.)
David Grabiner
User avatar
grabiner
Advisory Board
 
Posts: 12785
Joined: Wed Feb 21, 2007 12:58 am
Location: Columbia, MD


Return to Personal Finance (Not Investing)

Who is online

Users browsing this forum: Bing [Bot], ny_rn, Yahoo [Bot] and 14 guests