David:
I had a "bad" year, though I do have the "luxury" of some tax-free disability monies we live off of.
I made a $4000 traditional IRA contribution in Jan 2000 for year 2000.
My taxable AGI is just $7600, and with $23000+ itemized deduction (medical bills!), I owe no tax.
My wife and I have $16,000 each in traditional IRAs (including the $2K added last year).
My question: does it nake sense to take advantage of this year and:

1. recharacterize the year 2000 trad IRAs ($4000) to Roths?
2. convert the trad IRAs ($28000) to Roths and "pay the tax?"

I estimate this might make my tax refund of $600 become a tax bill of $1600; but $1000 out-of-pocket to shield $32,000 from taxes forever sound pretty good, do you think?

I just need some back-up...my wife says it sounds TOO good...

Rick

It's too late to do a year 2000 Roth conversion.

I assume that the $4,000 was split -$2,000 for you and $2,000 for your wife.

You may recharacterize the contributions to Roth IRAs. As deductions are not permitted for Roth IRA contributions, you will not be subjected to income tax when you eventually take a distrbution- unless the distribution is non-qualified, at which time you will pay taxes ONLY on the earnings and a 10% pre-mature penalty , also on the earnings if you are under the age of 59 1/2)