RE: [taxchat] Roll over question

Do they want to convert to a Roth and are considering the option to recharacterize at some point down the road if the market falls futher? If so, wouldn't they be better off waiting until 1/2/09? Then they have until the filing deadline in 2010 to recharacterize. If they decide to do so, they could still recharacterize at any time in 2009. The rules as I read them are pretty liberal (no political comment intended.) 

 

If their thinking is that they may convert to a Roth, recharacterize back to an IRA and then reconvert to a Roth, TheTaxBook provides the following rules:

 

Reconversion Rules

When a traditional IRA is converted into a Roth IRA, then recharacterized as a traditional IRA,

then converted back into a Roth IRA, it is called a reconversion. A taxpayer cannot reconvert before:

·      The beginning of the year following the year in which the amount was originally converted into a Roth IRA or, if later,

·      The end of the 30-day period beginning on the day on which the amount was transferred  from the Roth IRA back to a traditional IRA in a recharacterization.

 

This scenario might be the one that you were referring to. Again, doing the initial conversion in 2008 or 2009 doesn't seem to make much difference. If they recharacterize in 2009, they would still have to wait until 2010 to reconvert.

 

Arnie may be the most familiar with this topic. I'd be interested in hearing from him on this.

 

Mel

---

From: taxchat@yahoogroups.com [mailto:taxchat@yahoogroups.com] On Behalf Of Robert Lukey
Sent: Saturday, December 06, 2008 10:22 AM
To: taxchat@yahoogroups.com
Subject: [taxchat] Roll over question

My client has an IRA that has tanked badly. They want to know if they have to roll it over before 12/31/08 in order for it to be an 08 rollover. I've got limited knowledge here. Can they wait and do it before they file? I believe they have to roll over before 12/31/08 but can change their mind and revert back before filing.

--
Robert Lukey EA CPA

__._,_.___

IRS Circular 230 Disclosure: Unless expressly stated otherwise in this transmission, any tax advice contained herein, forwarded with or attached to this message was not and is not intended to be used, nor may it be relied upon or used, by any taxpayer for the purpose of (1) the avoidance of any tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions, or (2) promoting, marketing or recommending to another party any tax transaction or tax-related matters that may be addressed herein.

Your email settings: Individual Email|Traditional
Change settings via the Web (Yahoo! ID required)
Change settings via email: Switch delivery to Daily Digest | Switch to Fully Featured
Visit Your Group | Yahoo! Groups Terms of Use | Unsubscribe

__,_._,___