Did you convert your traditional IRA to a Roth IRA in 2015 and wish you hadn’t? Perhaps the market value has dropped lower than it was when you converted it. Or maybe you just changed your mind, or something changed in your financial situation so that you can’t afford the conversion tax right now. Then don’t miss the opportunity to undo (recharacterize) that conversion. You have until October 17, 2017, to have that conversion treated as if it never happened for tax purposes. To recharacterize, your IRA administrator will transfer your Roth IRA assets directly back to your traditional IRA account.
If you still want to take advantage of a Roth IRA conversion, but think you can do so at lower market values, you can re-convert that same money to a Roth IRA again. However, you would have to wait 30 days from the date the funds are transferred back into your traditional IRA. You can always immediately convert other traditional IRA money you may have without having to wait the 30 days.
If you already filed your 2015 income tax return, you’ll need to file an amended tax return to remove the reported conversion and claim a refund of the conversion tax.
Cindi Turoski is a managing member of Bonadio Wealth Advisors based out of our Albany, NY office.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.