SecondCor521
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Hi all,
I converted money from my traditional IRA to my Roth IRA this year. I plan to recharacterize a portion of this conversion in early 2017 in order to dial in my AGI on my 2016 taxes to exactly where I want it to be.
My question is this: May I do the recharacterization in two transactions?
I am not exactly sure how my taxes will look for this year, in part because I have a capital gain that may or may not qualify for a section 1202 exclusion, and to a lesser extent because I don't yet have access to tax software for the 2016 tax year.
I want to convert as much from my traditional to my Roth as possible as long as I don't pay taxes at higher than a 20% marginal rate. Since I'm not sure exactly what that amount will be, I have converted more than I think will be needed and I plan to recharacterize the excess once I get access to 2016 tax software and have all of my actual tax forms (1099's and such) and of course find out if my capital gain does in fact qualify for a section 1202 exclusion.
My IRAs are at Vanguard and I am assuming I will have to do an in-kind recharacterization of a whole number of mutual fund shares prior to the close of business, which, with a semi-volatile stock market, makes it somewhat dicey to get close to the right amount.
So what I am thinking I will do is do about 95% of the recharacterization, see how close I get, and then do the remaining 5% of the recharacterization in a secondary transaction a few days later.
I would think this would be OK, but the instructions for Form 8606 and Pub 590 and all of the examples I have googled so far assume a single transaction.
So to give hypothetical numbers, if I do:
10/1/2016 $40K conversion from traditional to Roth
2/1/2017 $9K recharacterization (+- associated earnings/losses) from Roth to traditional
2/5/2017 $1K recharacterization (+- associated earnings/losses) from Roth to traditional
Can I go ahead and file form 8606 and put $30K on line 16 in part II?
I converted money from my traditional IRA to my Roth IRA this year. I plan to recharacterize a portion of this conversion in early 2017 in order to dial in my AGI on my 2016 taxes to exactly where I want it to be.
My question is this: May I do the recharacterization in two transactions?
I am not exactly sure how my taxes will look for this year, in part because I have a capital gain that may or may not qualify for a section 1202 exclusion, and to a lesser extent because I don't yet have access to tax software for the 2016 tax year.
I want to convert as much from my traditional to my Roth as possible as long as I don't pay taxes at higher than a 20% marginal rate. Since I'm not sure exactly what that amount will be, I have converted more than I think will be needed and I plan to recharacterize the excess once I get access to 2016 tax software and have all of my actual tax forms (1099's and such) and of course find out if my capital gain does in fact qualify for a section 1202 exclusion.
My IRAs are at Vanguard and I am assuming I will have to do an in-kind recharacterization of a whole number of mutual fund shares prior to the close of business, which, with a semi-volatile stock market, makes it somewhat dicey to get close to the right amount.
So what I am thinking I will do is do about 95% of the recharacterization, see how close I get, and then do the remaining 5% of the recharacterization in a secondary transaction a few days later.
I would think this would be OK, but the instructions for Form 8606 and Pub 590 and all of the examples I have googled so far assume a single transaction.
So to give hypothetical numbers, if I do:
10/1/2016 $40K conversion from traditional to Roth
2/1/2017 $9K recharacterization (+- associated earnings/losses) from Roth to traditional
2/5/2017 $1K recharacterization (+- associated earnings/losses) from Roth to traditional
Can I go ahead and file form 8606 and put $30K on line 16 in part II?