Message Font: Serif | Sans-Serif
No. of Recommendations: 0
Many thanks for your reply below. It was immensely helpful. My situation matches your second example, i.e., the conversion was made to an existing Roth IRA. This brings up another problem. Form 1099R shows the value of the conversion (it was securities, not cash) on the day when the conversion was made. I do not know the exact balance in the Roth IRA on that day, but only its balance on the end-of-month statement that month. Additionally, the value of the conversion shown on the end-of-month statement had declined by 1.24% from the day that it was converted (and the amount on form 1099R). So which of the two amounts should I use for the amount of the conversion? Unless, I extrapolated, the only amount that I have for the account value is the end-of-month one.


"In 2004 I converted a portion of my IRA to my Roth IRA (at Institution 1). Later in 2004, I transferred my IRA and Roth IRA accounts to a different financial institution (Institution 2). I later discovered that I was not eligible to make the conversion, and I have had a six-month battle trying to have the conversion recharacterized. Institution 2 says that it must have a statement from Institution 1 to show the earnings or loss attributed to the amount converted while the funds were at Institution 1. Institution 1 will not provide the statement, saying that the onus is on Institution 2 to complete the recharacterization. Who is right, Institution 1 or Institution 2? How can I get this resolved; it now seems to be at a total impasse. I will be grateful for any suggestions.

Institution 1 is right, it's not their problem. Institution 2 is partly right, it's not their problem either. It's actually your responsibility to do the calculation and tell them how much to recharacterize. Many, but not all, brokerages will do the work for you if they have the information. Here's how I would handle this.

If the 2004 conversion was the first time you placed any money into a Roth IRA, your task is simple. Send institution 2 a copy of the statement from institution 1 that shows the conversion. Any change in value from the converted amount to the transferred amount is gain/loss. The total amount you need to recharacterize is the appropriate amount of the conversion plus/minus the proportionate share of the earnings/loss.

If, as I suspect, the 2004 conversion added to an existing Roth IRA, send institution 2 the same statement. Enclose a letter with it that details the following calculation. The ratio of converted amount to total balance on the date of the conversion times the amount transferred is the transferred balance associated with the conversion. The difference between this amount and the converted amount is the gain/loss associated with the conversion. You can finish the calculation as described in the preceding paragraph.

If any of this is unclear, (and it may be because I'm trying to keep it short), just ask again.

Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.