Recharacterizing partial recharacterization?

- R
- Rich Carreiro
  
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posted
14 years ago

Tue, Apr 21, 2009 4:50 PM

In Jan *2008* I made a full $5000 trad IRA contribution.

In March *2009* after doing my taxes, I saw that I was eligible to make a partial Roth IRA contribution and so recharacterized some of the trad IRA contribution into a Roth.

However, I've run across a misplaced 1099-INT and refiguring my MAGI shows that the Roth contrib is now $50 more than I'm allowed to make.

I know about the option to leave it in, pay the penalty on the $50 and have the $50 deemed part of a future Roth contribution.

I also know I can just have the $50 (and any attributable earnings) just sent to me.

But can I re-recharacterize those $50 back to a trad IRA contrib? Or are you allowed only one recharacterization?

-- Rich Carreiro snipped-for-privacy@rlcarr.com

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- M
- Mark Bole
  
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Vote on answer
posted
14 years ago

Tue, Apr 21, 2009 8:15 PM

[...]

Pg. 32 of Pub 590 says the election to recharacterize cannot be changed after the transfer is made.

Also, wasn't the $50 an excess Roth contribution from the very beginning? Just because you didn't know your correct MAGI at the time doesn't change what your MAGI actually was. I don't think you are allowed to re-characterize an excess contribution.

Even if neither of the above apply here, since you have to drag the earnings during the computation period along with each move back and forth between the two IRA's, is it really worth the time and effort on both your and your IRA custodian's part? Surely the tax effect of this $50 will be less than the cost of reporting it (writing a statement to accompany your Form 8606).

-Mark Bole

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