Message Font: Serif | Sans-Serif
No. of Recommendations: 0
My wife and I are both 62 and retired.
We both have retirement funds in tax deferred IRAs.
We file our tax return as "Married filing jointly".

Early 2001, I (partially) converted tax deferred IRA funds to a Roth IRA (holding equities) and incurred ordinary income tax liability on the amount converted. Since then, the value of the Roth IRA has dropped substantially (although the tax liability has not)! I still have funds available in my tax deferred IRA.
It is my understanding that I can recharacterize the Roth IRA funds back to my tax deferred IRA and this would relieve me of the tax liability on the original conversion. I also understand that I can not reconvert these funds to a Roth IRA in the same year (2001).

1. If I do recharacterize the Roth IRA funds can I, in the same year, use "not previously converted this year" funds from my tax deferred IRA to do a new conversion to my Roth IRA?

2. My wife has her own tax deferred IRA and Roth IRA.
I assume she can execute conversions and recharacterizations independently regardless of my IRA activities (except as it would impact our joint tax return).
If so, would the following strategy be permissible?
Assume "our" annual objective is to convert $10,000 from a tax deferred IRA to a Roth IRA. We could each choose, during the year, a time to convert $10,000 to our own Roth. In December, we would review the performance of each Roth and recharacterize the conversion with the least benefit, leaving "us" with the best performing $10,000 conversion for the year. I assume this could be repeated annually.

Comments would be greatly appreciated. Please cite the source of any information in the public domain.

Thanks, azBillRet
Print the post  


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.
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.