Reconversion

Reconversion

A method used by individuals to minimize the tax burden of converting by recharacterizing Roth IRA-converted amounts back to a Traditional IRA and then converting these assets back to a Roth IRA again. Be aware that the IRS released regulations in 1999 placing limits on reconversions.

Notes:

Investors who want to reconvert to a Roth IRA must wait until the beginning of the new tax year following the tax year they recharacterized or a minimum of 30 days after the recharacterization is completed, whichever is later. For example, if you recharacterized a conversion contribution on Dec 15, 2004, you would not be able to reconvert until Jan 15, 2005. If you reconvert prior to these limits, the reconversion will be deemed a failed conversion by the IRS, and if not corrected may result in an excess contribution to the Roth IRA.

See also: In-Service Withdrawal, IRA, IRA Conversion, IRA Adoption Agreement and Plan Document, Non-Qualified Distribution, Ordering Rules, Qualified Distribution, Recharacterization, Required Minimum Distribution, Roth IRA, Spousal IRA, Triggering Event