Another Conversion/Recharacterization Question

[Guest MSDalt]

My wife and I each have more than one IRA with different brokerages. I plan to partially convert at least two of her accounts to new Roths and then recharacterize depending upon post-conversion market performance and the amount of ultimate 2008 tax liability. I may also convert from my own IRA(s) depending on the reply I receive to the following.

I seem to recall hearing somewhere that if I recharacterize, I cannot make another conversion to a Roth within the same year. Perhaps my recollection is wrong.

My question is: If the above recollection is accurate, may I recharacterize a 2008 conversion in 2009 and then perform another conversion in 2009 (obviously for 2009)? I don't suppose that my wife's recharacterization would impact my own same-year conversion - even if we do file a joint return.

Thanks for any help in demystifying this stuff.

Michael

[Guest SLO CA CPA]

Michael

I neglected to attach the reply the first time

your question about 08 conversion to roth ira and then possibly recharacterizing it from roth ira back to traditional ira in 09 would not preclude you from converting a 2009 ira to a roth ira but you may need to wait at least 30 days after the recharacterization

for the following reasons

1. the recharecterization would be considered 2008 income and as such you would be entitled to convert a traditional ira to a roth ira in 09

2. The rule you seem to recall is applicable if you converted ira to roth ira in 08 and then have already recharacterized the amount back to traditional ira in 08. IF that was the case you would have to wait until 1/1/09 in order to convert the ira to a roth again

(the later of 1/1 of the following tax year of the recharacterization or 30 days after the recharacterization, whichever is later)

slo ca cpa

[Guest MSDalt]

Michael

I neglected to attach the reply the first time

your question about 08 conversion to roth ira and then possibly recharacterizing it from roth ira back to traditional ira in 09 would not preclude you from converting a 2009 ira to a roth ira but you may need to wait at least 30 days after the recharacterization

for the following reasons

1. the recharecterization would be considered 2008 income and as such you would be entitled to convert a traditional ira to a roth ira in 09

2. The rule you seem to recall is applicable if you converted ira to roth ira in 08 and then have already recharacterized the amount back to traditional ira in 08. IF that was the case you would have to wait until 1/1/09 in order to convert the ira to a roth again

(the later of 1/1 of the following tax year of the recharacterization or 30 days after the recharacterization, whichever is later)

slo ca cpa

Thanks for the reply. slo ca cpa,

If I convert from three different traditional IRAs and elect to recharacterize, may I recharacterize one or two - or must I do so to all 3? Two will be partial conversions from my wife's traditional IRAs and one from my own.

Gratefully,

Michael

[jane123]

Michael

I neglected to attach the reply the first time

your question about 08 conversion to roth ira and then possibly recharacterizing it from roth ira back to traditional ira in 09 would not preclude you from converting a 2009 ira to a roth ira but you may need to wait at least 30 days after the recharacterization

for the following reasons

1. the recharecterization would be considered 2008 income and as such you would be entitled to convert a traditional ira to a roth ira in 09

2. The rule you seem to recall is applicable if you converted ira to roth ira in 08 and then have already recharacterized the amount back to traditional ira in 08. IF that was the case you would have to wait until 1/1/09 in order to convert the ira to a roth again

(the later of 1/1 of the following tax year of the recharacterization or 30 days after the recharacterization, whichever is later)

slo ca cpa

Thanks for the reply. slo ca cpa,

If I convert from three different traditional IRAs and elect to recharacterize, may I recharacterize one or two - or must I do so to all 3? Two will be partial conversions from my wife's traditional IRAs and one from my own.

Gratefully,

Michael

You can recharacterize one, two or even a part of any one. No need to recharacterize them all unless you want/need to.

J