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Author: pmarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121351  
Subject: Re: Clarify Recharacterized Roth to Traditional Date: 2/23/2000 12:50 PM
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<< 1. Since husband is part of employer's qualified retirement plan and AGI over $150K (filing jointly), the recharacterized Roth to Traditional IRA is allowed, but not deductible, right? >>

Actually, since he's covered by a plan his contribution becomes nondeductible at $61K in AGI. He files Form 8606 to report both the recharacterization and the nondeductible contribution.

<< 2. Since wife NOT part of an employer's qualified retirement plan, her recharacterized Roth to Traditional IRA is allowed, but not deductible either because the AGI is over $150K since filing jointly. >>

This is a phaseout from $150K to $160K, so part may be deductible. BTW, the elibility for Roth contributions is also a phaseout from $150K to $160K, so there might be some Roth contribution allowed, even if the anticipated capital gain comes through. Remember that if the husband can make 401(k) contributions that reduces AGI.

In any case, don't recharacterize until you're sure you will be over the limit. You have until the due date of your 2000 return, with extensions, to complete the recharacterization.

Phil Marti
Tax Preparer
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