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If I may impose on you for a moment, this is my situation regarding recharacterization of Roth IRA and the steps I plan on taking to achieve a tax benefit due to depressed values. Do I have it right or will I crash & burn?
2 existing Roth's, 1 is contributory with Ameritrade for FY1998(approx. 2% increase since established), 1 is rollover with Kaufmann Fund from previously established (c. 1995) Traditional IRA (significant decrease since rollover). Funds in Traditional IRA were all deductible contributions.
Step 1 - Liquidate & Transfer Kaufmann to Ameritrade Roth;
Step 2 - Unwind entire Ameritrade Roth to Ameritrade traditional IRA (transfer notification specifying that this is a recharacterization of Roth IRA);
Step 3 - Convert traditional IRA back to Roth IRA.

If I understand correctly the amount converted in Step 3 is the amount for which I incur the tax liability. Any potential tax liabilities from the initial contribution and rollover are superseded by the unwinding and reconversion. As asked above will this fly or flop?
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