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Subject:  Re: o well Date:  12/30/2011  4:25 AM
Author:  TMFPMarti Number:  114477 of 130957

* when stock is moved , the conversion is valued
at market /
when recharacterized, same same?

Kinda, sorta, not really. You're correct that the amount of the conversion is the current value of what's converted. Once the conversion is done, stop thinking about individual holdings in the Roth and think just of total account value.

Moving on to recharacterization time, the amount of the conversion plus or minus the earnings on that amount while it was in the Roth is the amount of assets that go back to the traditional IRA. The custodian calculates the amount, you name the assets.

So, for example, you could convert 100 shares of ABC at $100/share, for a total conversion of $10,000. When you do your final numbers you realize that you should have converted only $8,000. So you tell the custodian to recharacterize $2,000 plus/minus the earnings and "fund" the recharacterization with a combination of cash and shares of XYZ. The bottom line on your return is $8,000 of income from the conversion.

You'll find a thorough explanation in Pub 590.

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