OxLobber

Thanks, txdd. One last question: my wife turned 70 on 12/31/17 and will obviously become 70 1/2 on 6/30/18. She will begin taking RMD in 2018 and will make a Roth conversion after the first RMD is taken. May she now make a deductible spousal contribution to her IRA for 2017 before we file our 2017 return? (I work, am not covered by a qualified plan, and have sufficient income to otherwise allow the contribution). I realize that the deductible contribution would need to be considered as part of the basis when calculating her RMD. Grateful for your help, Michael

txdd, Thanks for the response. I have been thinking about your statement, "...she can't convert anything to Roth before taking the 2018 RMD." Are you speaking in terms of reporting or chronological timing? If she converts in January and takes her full IRA RMD later in the year (turning 70 1/2 at the end of June) is that OK? If the requirement is that she must take the RMD before the conversion (chronologically), must the RMD from her 401k also occur first? Gratefully, Michael

My wife will reach age 70.5 in 2018. If her initial RMD is deferred until 2019, is its basis the 12/31/17 account value or the 12/31/18 amount? (She will be converting a portion to a Roth in 2018 so the 12/31/18 value will be less.) Question 2: When a dividend is declared in December and not paid until January, it does not appear in the year end account valuation. Must it be included when calculating the basis for RMD? Thanks, Michael

Thanks, Card - the following paragraph from the article essentially answered my question: "Some of those following this legislation have commented that this repeal may only be for 2018 Roth conversions, so in that case you would still have until October 15, 2018 to undo a 2017 Roth conversion. I don’t see it that way and wouldn’t risk taking that position with a client. The provision states that recharacterizations are repealed after this year, meaning that the recharacterization option no longer exists in 2018. Even if this is not perfectly clear yet, I still would not take a chance. Advisors should protect clients and assume that recharacterizations of 2017 Roth conversions will no longer be available after year-end." I am concerned that waiting until the legislation is finalized/clarified will not afford sufficient time to convert in 2017.

Is anyone aware of provisions in the tax bills to allow 2017 conversions to be recharacterized in 2018 despite the elimination of that ability going forward? Thanks Michael

I have seen scant mention of plans within the Republican tax bills to discontinue recharacterizations of Roth IRA conversions. I have made liberal use of these in recent years to lower impending RMD while controlling my taxable income to levels below undesirable breakpoints. Do they really expect to increase revenue significantly by making this change?