wilywilly
Jun 5 2000, 12:29 PM
My AGI made me ineligible to make a Roth IRA contribution for 1999, but for 2000 it will be much lower. So I made a traditional IRA contribution for 1999 in January, 2000, and a few days later converted it to a Roth (a year 2000 conversion). My IRA trustee has issued a Form 5498 for 1999 showing a $2000 contribution to a Roth for 1999. I have asked for a corrected 5498, and the initial response I got was that the Roth conversion before April 17, 2000 "recharacterized" the contribution from traditional to Roth, even though I did not request a recharacterization.
Am I correct in assuming that if I do not elect to recharacterize the contribution, that my intended scheme works - a 1999 contribution, followed by a 2000 Roth conversion?
John G
Jun 5 2000, 05:00 PM
I don't get any "scheme", this is business as ussual. You can convert prior IRA contributions if you income qualify.
Sounds like you need to talk to a senior person in the IRA/retirement dpt of your custodian. They should not unilaterally act without your instructions. If a supervisor doesn't acknowledge that they screwed up, then get a new custodian. If your instructions are clear (first 99 regular IRA, then converting to Roth) they made a mess and should correct it pronto. No custodian should assume that you qualify for a Roth in a prior year.
Do note: the income qualifications are different between conversions and regular Roth contributions. See
WWW.rothira.com site for more details.
John Olsen
Jun 5 2000, 06:04 PM
Your IRA custodian screwed up, if your paperwork clearly identified the second transaction as a CONVERSION to a Roth. And the notion that "a Roth conversion before April 17, 2000 'recharacterized' the contribution from traditional to Roth is BALONEY! Are they saying that ALL conversions in the first 3 1/2 months of the year are automatically "recharacterizations" of any contributions made in the prior year?
Yeah, right.
Somebody screwed up and doesn't want to admit it. DEMAND that they CORRECT the transactions.
The more I work in this area, the more I'm convinced that MANY IRA Custodians should be legally barred from handling IRA money. And, perhaps, from handing ANY money in a fiduciary capacity.
If they can't do fiduciary work properly, they shouldn't be doing it.
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John L. Olsen, CLU, ChFC
Olsen Financial Group
St. Louis, MO
314-909-8818