Do I have additional time under final regs to convert from IRA to Roth

[Guest breezer]

I failed to recharacterize my IRAs to roth IRA prior to 12-31-98. In April I discovered that I did indeed meet income limitations for 1998. Is it too late to convert for 1998 by filing amended return?

[BPickerCPA]

Your terminology is incorrect in that you do not "recharacterize" your traditional IRA to a Roth. A "recharacterization" is an "undo". For that there is still time.

However the deadline to "convert" an IRA to a Roth was 12/31/98.

If you will meet the 1999 income limitation, you can do a 1999 conversion.

[John G]

While 1998 is kaput, you can convert all or part of your existing IRAs as long as you qualify each year. The partial conversion allows you some control over the tax bite. Note, the IRS will treat all of your IRA assets as one lump, you are not converting a specific mutual fund or stock but rather some fraction of your total IRA assets. The fraction of your entire IRA amount that was originally non-tax deductable contributions will be subtracted to give you the taxable income from your conversion.

It sounds like you may be a borderline qualifier. You can help yourself out by defering into 2000 any bonuses you might get at year end. You also have some control over the timing of capital gain sales/losses. If you own a business, you may be able to buy more "stuff" this year and use the Section 179 expense which flows through Schedule C to the front page of the 1040. Talk with your accountant NOW about your tax planning.

One last point, if the market corrects you may be able to get your IRA assets converted at a lower total amount. So if the Dow drops 1000 pts, you might have a reason to be happy. The timing is tricky because custodians may process your request days after you give them a letter of instructions.

[This message has been edited by John G (edited 06-11-99).]