Retirement Saver's Credit

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nimo956
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Joined: Mon Feb 15, 2010 5:07 pm

Retirement Saver's Credit

Post by nimo956 »

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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crowd79
Posts: 640
Joined: Sun Nov 18, 2012 9:37 pm

Re: Retirement Saver's Credit

Post by crowd79 »

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/viewtop ... st=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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grabiner
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Re: Retirement Saver's Credit

Post by grabiner »

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.)
Wiki David Grabiner
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