BrianB
Recycles dryer sheets
Other threads have touched on Roth conversion / recharacterization issues with the new tax law, but the threads have multiple topics that make it difficult to follow comments on an individual issue.
We made a Roth conversion earlier in the year. The amount was about 2x what I expected we would want to optimize our taxes. We planned a partial recharacterization in March 2018 when we know our exact tax numbers.
I've been researching the subject and can't find an answer I am comfortable with.
Michael Kitces 12/18/2017 post on his blog:
Ed Slott comments in CNBC article 12/19/2017:
What is a person to do?
We made a Roth conversion earlier in the year. The amount was about 2x what I expected we would want to optimize our taxes. We planned a partial recharacterization in March 2018 when we know our exact tax numbers.
I've been researching the subject and can't find an answer I am comfortable with.
Michael Kitces 12/18/2017 post on his blog:
Fortunately, though, the new limit on Roth recharacterizations applies only for taxable years beginning after 12/31 of 2017 (i.e., the 2018 tax year and beyond). Which means existing already-completed 2017 Roth conversions should still be eligible to recharacterize in 2018 (since it would be recharacterizing a conversion for the 2017 tax year, while the new rules only apply in the 2018-and-beyond tax years). Although notably, the timing of the effective date for 2018 recharacterizations of 2017 conversion (i.e., whether they will be permitted or not) is still being debated by many tax commentators.
Ed Slott comments in CNBC article 12/19/2017:
Ordinarily, savers have until Oct. 15 of the year following the IRA conversion, also called a recharacterization, to go back and change it.
But if you did an IRA conversion at any time in 2017, you will only have until the end of 2017 to reverse your decision — provided the tax legislation passes with this provision in it.
"Effectively, if this comes to law, the recharacterization is dead, eliminated, repealed after 2017," Slott said. "If you were even thinking of, maybe I want to undo part of it, maybe I don't want to pay the full tax or any of it or I changed my mind, you should do that recharacterization by the end of this year to protect yourself."
What is a person to do?