Message Font: Serif | Sans-Serif
No. of Recommendations: 1
Phil (or other pros),

As I feared, my wife and I are in the same boat, so let me get this absolutely clear.

Even though we have maxed out our contributions to retirement plans, we can still take the portion of our Roth contribution (we each put $2000 in Roth in March 2000) that exceeds our allowed amount (plus the interest on it) and recharacterize it as a non-deductible traditional IRA with no tax consequence. The only difference would be, we will eventually have to pay taxes on the interest or gains, while in Roth there would be no taxes. Correct?

By the way, based on the number of inquiries on this topic, the idea of encouraging people to contribute to Roth IRAs a year before they know exactly how much they have earned is pretty stupid, even by tax law standards.
Print the post  


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.
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.