Author Topic: Recharacterizing from a Roth to a traditional IRA  (Read 1768 times)

Mazzinator

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Recharacterizing from a Roth to a traditional IRA
« on: October 15, 2013, 06:10:01 PM »
Hello all,

I tried to use the search tool, but i didn't find an answer to my question, so i'm hoping you all can help.

I'm trying to lower my AGI.

I've already contributed $5k (it's now worth 5,300) to my Roth ira this year, but i want to recharacterize it into a traditional ira.

When i called, he said it would recharacterize into my rollover ira, then i would have a "clean slate" to contribute to a traditional ira. Also, i will have to pay taxes on the $300 as ordinary income.

Do i understand this right? Why couldn't i recharacterize it directly into a traditional ira?

Thanks for any and all help!!

beltim

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Re: Recharacterizing from a Roth to a traditional IRA
« Reply #1 on: October 15, 2013, 06:43:26 PM »
I'm not sure about the rollover vs. traditional IRA (isn't your rollover already a traditional IRA?), but you definitely shouldn't have to pay taxes on the $300. 

I recharacterized some Roth contributions last year to a traditional IRA, and the brokerage just had to figure out how much to transfer since I had investment gains (the equivalent to your $300).  I did not have to pay taxes on this amount.

Zee

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Re: Recharacterizing from a Roth to a traditional IRA
« Reply #2 on: October 16, 2013, 10:10:03 AM »
Mazzinator,

I posted in a previous thread about how I went about the recharacterization and conversion:

http://www.mrmoneymustache.com/forum/ask-a-mustachian/roth-401(k)-and-backdoor-conversions-vs-traditional-401(k)/

While the situation may be different, this thread may contain some useful information.

Mazzinator

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Re: Recharacterizing from a Roth to a traditional IRA
« Reply #3 on: October 16, 2013, 10:01:13 PM »
Thanks..i did call back and talked to a different retirement specialist. This one confirmed my existing rollover is a tIRA. I just didn't know i could still contribute to it. I thought i had to open a different tIRA account.

This one also said the $5300 would transfer over and no taxes paid and he said it would still only count as if i contributed $5k for 2013. I'm just worried i misunderstood him too?? I just don't want to do anything i don't fully understand.

Zee- thanks for the link...i'm gonna need some time to re read that again. It made smoke come out of my ears! Yikes..

Thanks again you guys.