 |
| Image by accent on eclectic via Flickr |
Okay, so we’ve covered Roth Conversions – where you distribute the funds from your traditional IRA to a Roth IRA. Then we covered Recharacterizations – where you can “undo” the conversion by moving all or part of the converted funds and the earnings associated with it back into a traditional IRA. The end result is that, for those funds converted and recharacterized, from the eyes of the IRS, nothing happened to the account (except that you may have put the money back into a different IRA).
So, if you went through a Roth Conversion and then Recharacterized it, the assumption is that you wish to eventually re-convert those funds to a Roth account. When are you allowed to do this?
There are two limits on the Re-Conversion of funds to a Roth account once they’ve been through the Conversion/Recharacterization wringer:
- This first limit is that you cannot convert the same funds to Roth IRA twice in the same calendar year. This means that if you converted your account over to Roth in July of 2010 and recharacterized those same funds back into a traditional IRA in October of 2010, you cannot reconvert the funds again in calendar year 2010. You must wait until at least January of 2011 to re-convert.
- The second limit is that you cannot re-convert funds that have been recharacterized within the previous 30 days. From the example in #1 above, clearly this isn’t a problem since you already have to wait until the next calendar year from the recharacterization, which is more than 30 days away. If instead you recharacterized that original conversion in January of 2011, you have met the calendar year requirement – but now you have to wait for at least 30 days after the recharacterization before you can re-convert the funds.
It is important to note that all of this conversion/recharacterization/re-conversion is specific to the funds (that is, the account) that you have converted. If you have multiple IRA accounts you could conceivably have converted and recharacterized funds from one account within a few months (in the same calendar year), and then do another conversion of funds from one of your other accounts without the two limits above having an impact.
Sterling Raskie, MSFS, CFP®, ChFC®
The latest in our Owner’s Manual series, A 401(k) Owner’s Manual, was published in January 2020 and is available on 
A Medicare Owner’s Manual, is updated with 2020 facts and figures. This manual is available on 
Social Security for the Suddenly Single can be found on Amazon at 
Sterling’s first book, Lose Weight Save Money, can be 
An IRA Owner’s Manual, 2nd Edition is available for purchase on Amazon. Click the link to choose the 
Jim’s book – A Social Security Owner’s Manual, is now available on Amazon. Click this link for the 
And if you’ve come here to learn about queuing waterfowl, I apologize for the confusion. You may want to discuss your question with Lester, my loyal watchduck and self-proclaimed “advisor’s advisor”.