Forbes: IRS Sets Final 2018 Deadline For Roth Conversion Do-Overs

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Small Law Survivor
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Forbes: IRS Sets Final 2018 Deadline For Roth Conversion Do-Overs

Post by Small Law Survivor » Fri Feb 09, 2018 9:51 am

I can't imagine this hasn't already been posted, but I tend to look at BH every few days, so I miss a lot of posts. But, just in case:
One of the few retirement changes in the tax overhaul was the elimination of do-overs for Roth IRA conversions. It used to be that you could convert a traditional IRA to a Roth IRA one year, and then have until Oct. 15th of the next year to undo the transaction and avoid the tax hit. That move—called “recharacterization”--is no longer allowed. But what about taxpayers who made the move in 2017? They weren’t sure if they only had until Dec. 31, 2017 to unwind transactions, or if they would be allowed the extra time. Now the Internal Revenue Service has spoken in FAQs, and it’s a taxpayer-friendly answer.

The IRS website says this under IRA FAQs:

How does the effective date apply to a Roth IRA conversion made in 2017?

A Roth IRA conversion made in 2017 may be recharacterized as a contribution to a traditional IRA if the recharacterization is made by October 15, 2018. A Roth IRA conversion made on or after January 1, 2018, cannot be recharacterized. For details, see “Recharacterizations” in Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs). ... 78a3af54c6

If stocks fall far enough this spring, I may recharacterize some of my 2017 conversions, and do my 2018 conversion during this period.

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