I converted a couple weeks ago and already regret it. I know I can unconvert if it doesn't go well, but is conversion a one time thing? If I unconvert in July, can I convert again in November if the market improves?
I just had a horrible thought. If I unconvert, does it wipe out the taxes I have to pay, or do I have to pay taxes on the difference between what I converted and unconverted? That would be foul!
It's a one time thing within the same year. If you recharacterize (unconvert) in July, you need to wait till January to convert these funds again. The original amount of the conversion along with its growth should be coverted back. The broker should be able to do this for you. (as an aside Schwab has a check box to tell them to do just that.)
Joe
If you didn't do a full conversion (i.e. there was more money left in your IRA), then you can convert that money at any time. The "one time per calendar year" rule applies to each dollar in the traditional IRA. For example, if you converted $20K out of a $60K IRA, you've got $40K left to play with.
Suppose the $20K is now worth $18K, and the remaining $40K is now worth $36K. You can recharacterize (unconvert) the $18K, and you still have the other $36K that you can convert at any time.
See:
Note also, that if you recharacterize (unconvert) a conversion, not only must you wait until the next calendar year to convert the same money again, but you must also wait 30 days from the recharacterization.
Mark Freeland snipped-for-privacy@nyc.rr.com
--- news://freenews.netfront.net/ - complaints: snipped-for-privacy@netfront.net ---
The effect of a recharacterization is the same as if the original conversion never happened. Thus, no tax due. The amounts will surely be different because of earnings, positive or negative. You explain it on your return. See the instructions for Form 8606.
Phil Marti VITA/TCE Volunteer
I'm curious as to what are you invested in? The market is down, that's for sure, but the broad indices are only down about 6%. Surely you didn't convert millions that were invested in Euro derivatives :-)
You know another option would be to wait until closer to year-end (i.e. November) and then make your decision. If the market comes roaring back, you'll be glad you converted when you did. If it continues on this bearish trend, you can recharacterize at that time.
BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.