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i think i've mentioned my 'brilliant' strategy of converting just enough from tIRA to Roth every year to have to pay a few hundred to IRS (start TurboTax early, and "what-if" the conversion while estimating everything else)

TurboTax (TT) arrives, but i'm still trying to restore computer from backups (computer had been stolen)

then i go to hospital ...for a month
i collect some of my info, but not knowing when i'd get home, i do a WAG and make a conversion last week.

Get home --finish restore, install TT, collect better numbers .. but TT says Sched-D not available till Jan. "what-if" guessing with cap gains taxes a whole nother deal --but i make another WAG and another conversion

open up TT this morning and it says there are updates...
do the updates ... says one has something to do with Sched-D
sure enough --a provisional Sched-D ... enter my transactions and

looks like first WAG cost about 600 dollars; the 2d WAG another 1700
ie, paying $3200 or so, when "the plan" was to pay a couple hundred

unless i can move some back tomorrow without Complication or Consequence
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looks like first WAG cost about 600 dollars; the 2d WAG another 1700
ie, paying $3200 or so, when "the plan" was to pay a couple hundred

unless i can move some back tomorrow without Complication or Consequence


Not to worry unless you do something silly tomorrow. You have until October 2012 to recharacterize 2011 conversions. So relax until the software and your numbers are final, then come back if you need guidance on how to proceed.

Phil
Rule Your Retirement Home Fool

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unless i can move some back tomorrow without Complication or Consequence
---------------
Not to worry unless you do something silly tomorrow. You have until October 2012 to recharacterize 2011 conversions. So relax until the software and your numbers are final, then come back if you need guidance on how to proceed.



so i can wait till March, move back any part of the conversion i want &
not be taxed?

seems to good to be true.



... Thanks, Phil
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in fact, so easy why not do it every yr?


> move a big chunk of tIRA to Roth (by 12/31
> calculate taxes after 1099s and all arrive
>> 'what-if' a recharacterization,
and move whatever back to tIRA


???
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in fact, so easy why not do it every yr?

If your goal is to gradually convert just enough to "use up" a bracket, why not indeed? You have to watch out for some time limitations on conversions and recharacterizations, but it's not hard to stay perfectly legal.

Phil
Rule Your Retirement Home Fool
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in fact, so easy why not do it every yr?
======••=========••
If your goal is to gradually convert just enough to "use up" a bracket, why not indeed? You have to watch out for some time limitations on conversions and recharacterizations, but it's not hard to stay perfectly legal.


i guess that's what i'm trying to do---
get as much as possible out of IRA
so i will have more flexibility with RMD,
less tax for my sister when she gets what's left
AND keep current tax in bottom brackets

it just sounds too easy .. not like the IRS to make
things easy



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

Phil
Rule Your Retirement Home Fool
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not like the IRS to make things easy

The IRS gets blamed for a lot of things that are actually the result of the laws the brain-damaged turkeys in the legislature have passed. I apologize to the turkeys that have feathers.
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not like the IRS to make things easy

The IRS gets blamed for a lot of things that are actually the result of the laws the brain-damaged turkeys in the legislature have passed. I apologize to the turkeys that have feathers.



o Absolutely (and usually i'm more careful to distinguish)


just thought this (when and how much of a IRS distr. can be put back) was down in the nitty-gritty details the IRS generally does
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