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Author: oncemefool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 120826  
Subject: Roth Recharacterization Date: 2/2/2000 2:19 PM
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In 1998, I converted my conventional to a Roth. Found out this year about the 100K salary threshold and found out I had to convert back to traditional. Contacted my administrater at my credit union and they told me since I done the original conversion on 12/21/98 that I only had until 12/21/99 to convert back. Said now I have to file something called excess contribution. I thought I had until 4/15 of this year to do this. Can someone explain or set me straight on this. Thanks!!! Andy
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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: 26842 of 120826
Subject: Re: Roth Recharacterization Date: 2/2/2000 8:20 PM
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<< In 1998, I converted my conventional to a Roth. Found out this year about the 100K salary threshold and found out I had to convert back to traditional. Contacted my administrater at my credit union and they told me since I done the original conversion on 12/21/98 that I only had until 12/21/99 to convert back. Said now I have to file something called excess contribution. I thought I had until 4/15 of this year to do this. Can someone explain or set me straight on this. >>

You are quite likely in a major mess, and while some of it is the credit union's fault, it's not their fault that you didn't notice the AGI limitation in 1998.

The deadline for "undoing" a 1998 conversion was 12/31/1999. If you cannot convince the credit union to retroactively recharacterize your Roth back to a traditional, because of their erroneous information, it looks like you have a 1998 premature distribution of your entire traditional IRA and no way to get it back into an IRA. I hope I'm wrong about this, and will welcome someone showing me that I am.

Phil Marti
Tax Preparer

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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 27001 of 120826
Subject: Re: Roth Recharacterization Date: 2/3/2000 2:55 PM
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<<The deadline for "undoing" a 1998 conversion was 12/31/1999. If you cannot convince the credit union to retroactively recharacterize your Roth back to a traditional, because of their erroneous information, it looks like you have a 1998 premature distribution of your entire traditional IRA and no way to get it back into an IRA. I hope I'm wrong about this, and will welcome someone showing me that I am.>>

I wish somebody could show me also. I have a personal interest in the answer (or...at least a new client has a personal interest). I've searched and searched, and can't find ANYTHING that would allow for a recharacterization after the 12-31-99 drop dead date.

It appears that it would all be taxable and subject to penalties. For the client that I'm doing the research for, this could amount to the low 6 figures in taxes and penalties. I'd love to be able to find a loophole that he can wiggle through...but I've not found one yet.

So if anybody else comes up with a way around this issue, make sure to post it. I hear rumblings that there might be a "final" grace period extension to some time beyond 12-31-99...but there is no legislation (either current or pending) that I can find to confirm those rumors.

Just thought I'd thow this in...for what it's worth.

TMF Taxes
Roy

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