Not All Recharacterizations Have Gone Away

You may recall that the ability to recharacterize a Roth IRA conversion went away as part of the tax cut that passed in 2017. It wasn’t a major sticking point of the legislation, but it did create some concern about how it could affect those saving for retirement. However, I want to remind you that only recharacterization of Roth IRA conversions went away and that the ability to recharacterize other types of transactions still remains a possibility. For example, if you made a Roth IRA contribution but did not realize that you were above the income threshold to do so, Continue reading Not All Recharacterizations Have Gone Away

Time is Running Out to Make an IRA Conversion This Year

Have you been considering converting a traditional IRA to a Roth IRA? Well, if you want to do so and have the associated taxes count in 2018, you only have three (3) weeks left to do so. IRA conversions must be done by the end of the calendar year if you want them to count for 2018, which is particularly important if you want to take advantage of 2018 tax rates. If you do decide you want to make a conversion, make sure that it’s definitely something you want to do as recharacterizations are no longer allowed. The tax reform Continue reading Time is Running Out to Make an IRA Conversion This Year

Make an IRA Mistake? You Have Time to Correct It!

Along with being the deadline for filing your taxes, yesterday was the latest date in which you could make a 2017 IRA contribution. However, it was not the deadline for all 2017 IRA transactions. If you end up changing your mind regarding a 2017 IRA contribution, you can always recharacterize it–so long as you do so by October 15, 2018. Also, if you also made an unwanted IRA contribution, you can remove it (and it’s attributable earnings) by October 15, 2018. The same deadline applies for any excess contributions you may have made so as to avoid an excessive contribution Continue reading Make an IRA Mistake? You Have Time to Correct It!

Clarifying the Remaining Recharacterization Question

The tax reform legislation passed late last year included changes to retirement accounts and associated transactions. One of the biggest changes in the Tax Cuts and Jobs Act was that it got rid of the ability to recharacterize Roth IRA conversions, but kept the ability to recharacterize traditional IRA and Roth IRA contributions. This change took effect on January 1, 2018, but left one question remaining: What could be done regarding 2017 contributions that people may want to recharacterize at later date? Well, the IRS listened and has spoken. According to its website, a Roth IRA conversion made in 2017 Continue reading Clarifying the Remaining Recharacterization Question

Two Big Tax Reform Retirement Takeaways

With the tax reform bill having successfully made its way through Congress and to the President’s desk, it is almost certain to be signed into law before the end of the year. While the most talked about feature of the bill is how it will allow to tax cuts to the rich and middle class, it also contains other changes that could have a huge impact on a wide range of Americans, especially when it comes to retirement saving. As I’ve mentioned in this blog in the past, this tax reform bill eliminates the ability to recharacterize Roth IRA conversions Continue reading Two Big Tax Reform Retirement Takeaways

Recharacterization and the Tax Bill

It’s well known that the current tax reform legislation making its way through Congress can, and most likely will, impact your retirement accounts and plans. One target is regarding recharacterizations of Roth IRA and traditional IRAs, which both the House and Senate bills would do away with. Recharacterizations are important because it is one of the few tools available to correct a conversion. Under the current system, you have until October 15 of the year following the year in which you made the conversion to recharacterize it. This current system gives people time to reconsider and think about conversions and Continue reading Recharacterization and the Tax Bill

Thinking About a Recharacterization?

Did you make a mistake with your IRA in 2016? Perhaps you converted a traditional IRA to a Roth IRA and are now re-thinking the decision? Or maybe you contributed to a Roth IRA while mistakenly believing that your income was below the eligibility limits? If so, you may be able to fix those and certain other mistakes with a recharacterization. A recharacterization is a tax-free transfer of funds from one kind or IRA to another. If you are already considering a recharacterization, keep in mind that you must make the decision very soon as the deadline for recharacterizing a Continue reading Thinking About a Recharacterization?