Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev | Next
Author: TMFExRO Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121219  
Subject: Re: Late Roth Recharacterization Date: 11/30/2000 4:07 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Would it be possible to recharacterize the excess to a Traditional IRA, even though past due, still paying the appropriate excise tax and distribution penalties? That way, I've contributed $200 to a Roth and $1800 plus earnings to a Traditional this year and, at least I have some Traditional money working Tax-deferred for me?

Sorry, but no. The deadline for recharacterizing was 10/16/2000. Since you missed that date, you'll just have the $200 allowable Roth contribution for 1999.

Or do I actually have to sell stocks to equal the Roth excess and receive a check in the mail?

You have to remove the excess contribution and earnings from the Roth. If you want to use $2,000 of the proceeds to make your year 2000 traditional IRA contribution and your custodian can accommodate you, you don't have to actually receive the check and send it back. But anything over that you have no choice but to take the money.

Should I wait until tax time to figure all this out since, I assume the 6% excise tax is only subject to interest and the other penalties stay the same? It's gonna get expensive having my accountant file an amended return now.

The 6% tax on the $1800 excess contribution was due 4/15/2000. If you don't get the money out by the due date of your 2000 return, you'll owe another 6% penalty for 2000. I don't see the point of waiting.

I also don't see the point of paying your accountant to file the amended return. It would take you all of 10 minutes to do it yourself, and we'd be glad to help you here on the boards if you have questions.

On the other hand, if this accountant knew of the illegal Roth contribution and didn't advise you about it when preparing your 1999 return, I might be asking him to prepare the amended return for free.

TMF ExRO
Phil Marti
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev | Next

Announcements

Disclaimer:
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.
Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Managing Your Wealth
Our own TMFHockeypop from Rule Your Retirement fame on the TV show Managing Your Wealth.
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.
Post of the Day:
Apple

The Saddest Place on iPhone Day
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
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 "#1 Media Company to Work For" (BusinessInsider 2011)! 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.
Advertisement