No. of Recommendations: 0
I converted $20000 from my tradition IRA to roth IRA 6 months ago. I asked tax withheld from the $20000. SO the actual amount which went into the ROTH IRA is 16000. Now, I realize my income is too high to convert. So I want to recharacterize the ROTH back to traditional IRA. But the $4000 withheld tax can not be recharacterized.

If I file tax refund for the $4000, it will be considered an early distribution from traditional IRA and I will have to pay 10% panelty for that. How can I avoid that? Any suggestion would be appreciated.

Thank you very much.

Jean
Print the post Back To Top
No. of Recommendations: 0
What do you mean when you say your income is too high to convert? I'm not familiar with a limitation on conversions. What's the deal?
Print the post Back To Top
No. of Recommendations: 0
What do you mean when you say your income is too high to convert? I'm not familiar with a limitation on conversions. What's the deal?

From IRS Publication 590 (tax year 2003 version), page 27:

Converting From Any Traditional IRA Into a Roth IRA

You can convert amounts from a traditional IRA into a Roth
IRA if, for the tax year you make the withdrawal from the
traditional IRA, both of the following requirements are met.

1) Your modified AGI for Roth IRA purposes (explained
    in chapter 2) is not more than $100,000.

2) You are not a married individual filing a separate
    return.

Note. If you did not live with your spouse at any time
during the year and you file a separate return, your filing
status, for this purpose, is single.

Print the post Back To Top
Advertisement