Recharacterization

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Recharacterization

The reversal of a traditional IRA contribution or conversion into a Roth IRA, or vice versa.

Recharacterization

In IRAs, the act of making a contribution to a certain account, then deciding to apply the contribution to a different type of IRA. For example, if one has both a traditional IRA and a Roth IRA, one may make a contribution to the traditional account, then decide that it would be more beneficial to apply the contribution to the Roth account. Recharacterization is subject to certain rules. Primarily, one may not recharacterize tax-free rollovers or employer contributions.

Recharacterization.

When you have converted one type of individual retirement account (IRA) to another type -- such as a traditional IRA to a Roth IRA -- and then convert it back to the original type, you are recharacterizing the IRA.

Similarly, you can recharacterize a contribution you've made to one type of IRA as a contribution to another type of IRA. In either case, when the recharacterization is handled correctly, the original conversion or contribution is erased, as if it never happened. To be valid, a recharacterization must be handled as a transfer between IRA providers or internally by a single provider.

Further, it must be completed before the date your tax return is due, including extensions. You must also report the action to the IRS, and in some cases, you must file an additional form.

Recharacterization

Recharacterization is the process of changing the character of a traditional IRA contribution to a Roth IRA contribution or vice versa.
References in periodicals archive ?
Distributions are subject to re-characterization for tax purposes after the end of the fiscal year.
5) Six months after the closing arguments, the Trial Chamber determined it did not have evidence sufficient to convict Katanga of indirect co-perpetration and notified the parties that it would consider a re-characterization of the charges against Katanga pursuant to Regulation 55.
81) During the Rome Conference, the drafters of the Rome Statute considered the procedural treatment of judicial re-characterization of crimes, but were unable to reach a consensus on the issue.
Comprised of Cadence Virtuoso Liberate and natively integrated Cadence Spectre Circuit Simulator, the solution provides increased performance improvement in the characterization or re-characterization of ARM Artisan physical IP libraries, while meeting ARM's stringent accuracy targets.
These alleged damages are merely attempted re-characterization of mental anguish damages.
Moreover, taxpayers will have to review actions taken after the date the check-the-box election is made and before the extraordinary transaction occurs to determine whether any re-characterization (such as dividend treatment) is needed.
IRS recently released Notice 98-50 clarifying whether a taxpayer who has converted an IRA to a Roth IRA may not only transfer the amount back to a traditional IRA in a re-characterization, but also subsequently reconvert that amount from the traditional IRA to a Roth IRA.
The prepayment of rent under a lease, and the sale of the property or a leasehold interests, may trigger re-characterization of the deal by the IRS as an "obligation-shifting" transaction.
The Nuveen preferred securities funds, JTP, JPS and JHP may invest in REITs; a list of funds that are likely to be affected by re-characterization is posted to www.
The proposed regs provide special rules for the re-characterization of IRA contributions including Roth IRA and conversion contributions.
Consequently, IP characterization is a significant bottleneck in any chip design process especially as re-characterization is often required to ensure accurate correlation between the IP and the ever-shifting silicon process.
Funds that may be affected by such re-characterization include the Nuveen Real Estate Income Fund (JRS), the Nuveen Diversified Dividend and Income Fund (JDD), and the Nuveen Global Value Opportunities Fund (JGV).