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Roth Conversion Question
Old 12-23-2014, 07:58 AM   #1
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Roth Conversion Question

In 2013 I converted some IRA money to a Roth. A few months later, I needed to change the amount of that conversion, so I recharacterized some of it.

Today, I wanted to do my $8,000 Roth conversion for 2014, and got the message below.

Is this just a procedural thing (I simply have to do it over the phone), or will I not be able to do a Roth conversion for 2014?

Because you recharacterized assets from your Roth IRA earlier this year, you won't be able to submit your conversion request online. If the assets you recharacterized were originally contributed to a traditional IRA that you converted to a Roth IRA, and you now want to reconvert them back to a Roth IRA, note that the IRS prohibits you from doing so until either the beginning of the tax year following the original conversion or 30 days after the date of the recharacterization, whichever is later. If your reconversion meets these requirements, or if the assets you recharacterized were originally from a Roth contribution, call us at 800-345-1344 to complete your conversion request.
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Old 12-23-2014, 08:24 AM   #2
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Quote:
Originally Posted by TromboneAl View Post
In 2013 I converted some IRA money to a Roth. A few months later, I needed to change the amount of that conversion, so I recharacterized some of it.

Today, I wanted to do my $8,000 Roth conversion for 2014, and got the message below.

Is this just a procedural thing (I simply have to do it over the phone), or will I not be able to do a Roth conversion for 2014?

Because you recharacterized assets from your Roth IRA earlier this year, you won't be able to submit your conversion request online. If the assets you recharacterized were originally contributed to a traditional IRA that you converted to a Roth IRA, and you now want to reconvert them back to a Roth IRA, note that the IRS prohibits you from doing so until either the beginning of the tax year following the original conversion or 30 days after the date of the recharacterization, whichever is later. If your reconversion meets these requirements, or if the assets you recharacterized were originally from a Roth contribution, call us at 800-345-1344 to complete your conversion request.
T-Al, just winging it from memory here but somebody will fix if wrong:
You didn't say but I'm assuming you did the conversion late in 2013 and the recharacterization early in 2014? If so the requirements for reconversion are the later of 1)beginning of 2014 or 30 days after the recharacterization.......
you would meet the latter. So you should be able to do another recharacterization this yr.

If you had done the conversion in 2014, then that would be different. Their computer probably only is looking at the recharacterization date.

Actually my memory (be careful trusting it) tells me you can't convert the SAME assets twice in the same yr but if you had more assets and could prove you weren't converting the SAME assets, you could do another conversion the same yr...........proof like beaucoup assets in the same account or converting from other accounts than where recharacterization funds went.
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Old 12-23-2014, 08:26 AM   #3
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I think you can do it and you just have to call Vanguard rather than do it online.
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Old 12-23-2014, 10:36 AM   #4
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I think you can do it and you just have to call Vanguard rather than do it online.
Yes, that was the case, and it went smoothly. Thanks for the help.
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Old 12-23-2014, 02:10 PM   #5
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I had no trouble with Fidelity after 2013 Roth conversions, 2014 recharacterizations of some of those, and Roth conversions throughout 2014 (obeying the timing restrictions). Sounds like a Vanguard thing. Probably don't have the computers programmed for the timing restrictions after recharacterization.
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Old 12-28-2015, 10:33 AM   #6
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Just bumping this thread to see if I understand correctly.

I did a Roth conversion in 2014, then had to recharacterize half of it in April when I realized we had income I had forgotten about. So today (last minute, of course), I went in to do this year's conversion. But Vanguard says I can't do one this year because I did a recharacterization in 2015. Reading the thread above it sounds like I should be able to do the conversion since it's more than 30 days, but Vanguard for whatever reason doesn't let me. Is this right?

If so, I also have a Roth at TDAmeritrade. Could I just do the conversion there to avoid the Vanguard issue? I don't want to fall afoul of the IRS by any means. I'll try to do more research myself, but I have a hard time reading IRS-speak, so would appreciate any knowledgeable input.
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Old 12-28-2015, 10:41 AM   #7
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It sounds like you just need to call Vanguard.
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Old 12-28-2015, 01:15 PM   #8
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Vanguard may have thought it was a recharacterization of a 2015 conversion? That would not be eligible again until 2016. And it might "contaminate" any other shares in the IRA, recharacterized or not.

I convert into many Roth accounts, generally one fund per account. Then I can easily recharacterize if that fund tanks.

I recharacterize into an empty, or nearly so, IRA so that I won't need to Roth convert anything in that IRA until all the recharacterization waiting periods are over. So far I've been fine with just two IRA's. I'm sure I must have done the 30 day waiting period and then Roth convert with one of those accounts.
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Old 12-28-2015, 04:46 PM   #9
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Vanguard is who told me I can't do it. I was on the phone with them.

I will call them again, but I'm pretty sure they understood it was a 2014 conversion that was recharacterized in 2015. They seemed to have some sort of flag that popped up and told the Flagship Rep that I couldn't do the conversion. When I searched this site, this was the only thread I saw that seemed appropriate.

I also use multiple Roths in case I have to recharacterize. But last year was the first time I ever had to do it, so this is the first time I've run into this problem. But I'll call tomorrow and get a different rep, see if he/she says the same thing.
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Old 12-28-2015, 04:56 PM   #10
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If you recharacterized in 2015, then that particular IRA cannot have another conversion in 2015. It is not "whichever is earlier", it is "whichever is later." Please see
https://www.irs.gov/Retirement-Plans...nd-Conversions

Quote:
Is there a minimum waiting period to reconvert the money to a Roth IRA following a recharacterization?

Yes, if you recharacterize all or part of a rollover or conversion to a Roth IRA, you cannot reconvert the amount recharacterized to the same or another Roth IRA until the later of:
30 days after the recharacterization, or
the year following the year of the rollover or conversion.
The waiting period to convert applies only to amounts you recharacterized. For example, you can convert amounts from a different traditional IRA to a Roth IRA immediately.
So the wait can be much longer than 30 days if you have to wait to the next year.

Update: Wait a minute I didn't read that carefully.


I have done 4 conversions this year in 3 different IRAs and have a recharacterization of one of them in the works.
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Old 12-28-2015, 05:12 PM   #11
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Vanguard is who told me I can't do it. I was on the phone with them.

I will call them again, but I'm pretty sure they understood it was a 2014 conversion that was recharacterized in 2015. They seemed to have some sort of flag that popped up and told the Flagship Rep that I couldn't do the conversion. When I searched this site, this was the only thread I saw that seemed appropriate.

I also use multiple Roths in case I have to recharacterize. But last year was the first time I ever had to do it, so this is the first time I've run into this problem. But I'll call tomorrow and get a different rep, see if he/she says the same thing.
I hadn't realized that you had spoken with them, so if you still have no success with another rep, then I think your plan B will work to do a conversion in another brokerage.
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Old 12-28-2015, 06:39 PM   #12
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If you recharacterized in 2015, then that particular IRA cannot have another conversion in 2015. It is not "whichever is earlier", it is "whichever is later." Please see
https://www.irs.gov/Retirement-Plans...nd-Conversions


So the wait can be much longer than 30 days if you have to wait to the next year.

Update: Wait a minute I didn't read that carefully.

I have done 4 conversions this year in 3 different IRAs and have a recharacterization of one of them in the works.
So that sounds like my plan to use a different t-IRA/Roth would work. I'll call VG tomorrow to double check. Maybe I'll just skip it this year. It's not going to be that big of a conversion, and as I might end up having to recharacterize before I finish my taxes, I might end up putting myself right back into this situation next year. And I certainly don't want to do anything that draws the attention of the G-Men. I'm just surprised, as I had never heard about this limitation before.

Edit: But wait, I didn't read that right either. 2015 IS the year after the conversion, even though it's the same year as the recharacterization. This is definitely confusing. I'm sticking with not doing anything. It's worked for me so well in the past.
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