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Is it too late for me to rollover a trad IRA into a Roth and have it count for last year?

(I had lower-than-usual income in 2004, so it would have been a great year to do the rollover and take the tax penalty. Is it too late now? Or do I have until April 15th?)
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Is it too late for me to rollover a trad IRA into a Roth and have it count for last year?

Yes. Conversions to Roth result in income for the year in which the conversion is made.

Phil
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Phil,

Is that true even if you didn't take the deduction on your taxes (in anticipation of the conversion) and counted the income?

jlars
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Is that true even if you didn't take the deduction on your taxes (in anticipation of the conversion) and counted the income?

I'm squarely in the "Huh?" column. There's no deduction involved in conversions, which is what I thought we were talking about. Can you clarify exactly what you did and where you want to end up?

Phil
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Sorry about the delay; I can't always get on the Fool as much as I'd like.

Here's the scenario I'm talking about:
- Contribution made to a traditional IRA in 2004 for 2004.
- This contribution is the first contribution and constitutes the entire balance of the IRA.
- While doing 2004 taxes, realize that it would have made more sense to make a Roth contribution last year, so elect not to take the traditional IRA deduction and treat it like a non-deductible IRA contribution instead. (That's what I meant by "counting the income.")
- Convert the traditional IRA to a Roth in 2005, before April 15 (date probably doesn't matter).

So are there any taxes due on the conversion amount or are they just due on the earnings?

Hope this is a little clearer.

jlars
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- Contribution made to a traditional IRA in 2004 for 2004.
- This contribution is the first contribution and constitutes the entire balance of the IRA.
- While doing 2004 taxes, realize that it would have made more sense to make a Roth contribution last year, so elect not to take the traditional IRA deduction and treat it like a non-deductible IRA contribution instead. (That's what I meant by "counting the income.")
- Convert the traditional IRA to a Roth in 2005, before April 15 (date probably doesn't matter).

So are there any taxes due on the conversion amount or are they just due on the earnings?


There's no tax due period if you do it right. What you want to do is "recharacterize" the contribution and its earnings to Roth. The net effect (zero) on your 2004 taxes is the same, and the earnings that you recharacterize are considered Roth earnings. Your custodian has the necessary forms.

Phil
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Recharacterize -- the word was on the tip of my tongue and I just couldn't spit it out. I knew conversion didn't sound right.

Thanks for your help, Phil.
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