Traditional IRA Recharacterizations

An account owner may recharacterize a contribution made to a Traditional IRA by transferring a current year contribution plus earnings to a Roth IRA or vice versa. A taxpayer is permitted to recharacterize all or just a portion of a contribution or a conversion and the earnings attributable to that portion. Recharacterizations may only be done in a trustee to trustee transfer and must be accomplished on or before the due date (including extensions) for filing the account owner’s Federal income tax return for the taxable year for which the contribution was made. Recharacterizations are commonly done when an individual has made a Roth IRA contribution during a tax year and subsequently finds out his/her AGI is too high and he/she is not eligible to make a Roth IRA contribution that year.