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Subject:  Re: IncomeChanges/Roth IRA Date:  7/29/2002  10:45 PM
Author:  TMFTaxes Number:  61047 of 127753

<<Can I take advantage of this window of time where I make $40K/year and where the market has plunged, and recharacterize my IRA as a Roth IRA... or will I be forced to recharacterize once again in 2 years when my income returns to 6 figures? >>

I'm having a little problem with your wording. You use the term "recharacterize", but I really think that you mean "convert".

You CONVERT from a traditional IRA to a Roth IRA.

You RECHARACTERIZE from a Roth IRA back to a traditional IRA.

So if you're talking about conversion from your traditional IRA to a new (or even an existing) Roth IRA, then you're right on the money, as was the advice that you received.

Each conversion stands on it's own. If you convert this year...all or some of your traditional IRA to your Roth's a completely stand alone transaction. There is nothing that you'll be forced to do relative to any future conversions.

And, as you point out, you'll want to do it while your income is below the $100,000 modified AGI threashold allowing for the conversion.

TMF Taxes

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