pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
As many of you know, the ability to recharacterize Roth conversions is now gone for the tax year 2018 and beyond... crimping the style of many of us that manage taxable income to a certain level... in my case to the top of the 0% LTCG bracket. (You can still recharacterize Roth contributions, but not Roth conversions).
It just struck me today that there may be a suitable workaround for those 59 1/2 or older. Make part of what you otherwise would have done as a Roth conversion as a tIRA withdrawal instead and do it as late in 2018 as possible. Then do your tax return as early in 2019 as possible and if you have an excess, then just redeposit any excess back to your tIRA using the 60 day rollover rule.
Looks like that will work.
IRA Withdrawal Rules: When You Can Undo Without a Penalty | Money
It just struck me today that there may be a suitable workaround for those 59 1/2 or older. Make part of what you otherwise would have done as a Roth conversion as a tIRA withdrawal instead and do it as late in 2018 as possible. Then do your tax return as early in 2019 as possible and if you have an excess, then just redeposit any excess back to your tIRA using the 60 day rollover rule.
Looks like that will work.
You have a 60-day window to get that money back into an IRA. The key to the do-over option is a tax rule that people often use to roll IRA money from one financial institution to another. If you take a distribution from your IRA at Company A today and deposit those dollars in an IRA at Company B within 60 days, there’s no tax bill due.
You can also use this 60-day rule to deposit the money you withdrew back into your original IRA, says Suzanne Shier, chief wealth planning and tax strategist at Northern Trust: “You just have to put it back into an IRA. It doesn’t have to be at another institution.”
There are a few things you need to know: You can use this 60-day rule only once a year. However, there are no limits on transactions in which you direct your IRA custodian to send the dollars directly to another provider. And last year, the IRS granted a little more flexibility to IRA investors who accidentally go beyond the 60-day period for reasons such as a family death or home damage.
IRA Withdrawal Rules: When You Can Undo Without a Penalty | Money
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