Recharacterize Roth or Withdrawal?

[Guest jkr]

I put in $2000 each in a Roth for my wife and I for 2001. After doing my taxes, our AGI is $160,152, which makes us ineligible to contribute(by $152 measly dollars!). The $2000 is now worth about $2400. Can I recharacterize to a Traditional IRA without paying tax on the gain(I know, dumb question)? Does it make sense to do this or should I just withdrawal the money, pay tax on the earnings($400) and invest in a fund or stocks? We do not have a traditional IRA at this time. I prefer stocks/funds since I can get to this money at any time... Any advice is appreciated!!

[BPickerCPA]

You can recharacterize the contribution plus earnings into a traditional IRA and not pay tax on the earnings until withdrawn. This is what I always advise clients to do.