IRA ADVICE – ED SLOTTOctober will be here before you know it. I know this because I have already seen Halloween candy in the grocery store and Sarah’s blog on the recharacterization’s value reminded me. October 15 is the deadline for doing a Roth recharacterization. Here are ten things you need to know.

  1. A recharacterization must be a direct transfer from the Roth IRA to a traditional IRA. You cannot do a recharacterization as a 60-day rollover.
  2. A recharacterization is not calculated in shares; it is calculated in dollars. You may have converted 100 shares of stock Q, which you now want to recharacterize. But your recharacterization request must be done in the dollar amount of stock Q’s value when you converted the stock.
  3. A recharacterization must include any gain or loss attributable to the amount being recharacterized. This is a simple calculation when the conversion was done to a separate IRA. The current account value already includes any gain or loss on the conversion. When the conversion was done to an existing account then the gain or loss on the entire account must be calculated and the amount attributable to the recharacterization amount must be determined.

Go to my blog for the seven remaining  keys to recharacterization.

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