In March, 2008, I converted two IRAs and a Rollover IRA to Roth IRAs in custodian to custodian transfers. Tax was withheld from the conversions which were both stocks and cash. Nothing has been withdrawn from the Roths and I am not required to draw down my IRAs for 6 more years. I wish to recharacterize them back to their original status. How do I supplement the cash that was used for withholding and provided to the IRS? I (assuming I recharacterize) do owe any additional taxes this year. I live entirely off of retirement income and social security income so I cannot make any contributions. Any help I can obtain would be beneficial as the last, and only, answer I received from the custodian is that I cannot do a full recharacterization as the $$ sent to the IRS cannot be replaced by other money although I have sufficient funds to do so.
Recharacterzation
Mar 09, 2009
3 Replies
Too late for you, but not for lurkers. Having tax withheld was a bad idea, as you've learned. If you're under 59 1/2 and can't pay the tax from non-IRA funds you shouldn't be converting. If you're over 59 1/2 and have to withdraw something the next year to pay the taxes, no harm, no foul.
You can't. The withholding was an unconverted distribution. For example, if you took $20,000 from your traditional and had $2,000 withheld, you converted only $18,000. That's your starting point for the recharacterization, not the entire $20,000. The $2,000 is forever removed from the IRA umbrella.
So how does one recover this 2k. Is there a credit or something like that on form 1040? A stretch, but maybe you could add it to Line 63 Estimated Payments.
Look up just a tad. Line 62, withholding.
You have been out of the workforce for a while, havn't you?
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