Recharacterization of Roth IRA after taxes have been withheld

[Guest MarkK]

We converted to Roth IRA and had taxes withheld at the time. After discovering we are over the 100K AGI limit we want to recharacterize back to a traditional IRA. Can the withheld taxes be restored to the traditional IRA as well, or are we required to pay both taxes and 10% penalty on this money?

[BPickerCPA]

The taxes are deemed to be a withdrawal. You would have 60 days to restore the money to an IRA. IF you are past the 60 days, then you CANNOT restore the money to the IRA, and you must pay tax and penalty on it.