Recharacterize an IRA contribution

Have you made a Traditional IRA contribution and want to switch it to a Roth IRA contribution—or vice versa? You may be able to. We'll walk you through it.


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What's a recharacterization?

Let's say you've made a wise retirement move and contributed to a Roth or Traditional IRA. But you've changed your mind and want to reclassify it as a contribution to the other type of IRA. The IRS lets you—it's called a recharacterization.

When could this move benefit you?



You originally contributed to a Roth

BUT ...


you're eligible for a traditional IRA tax deduction.View traditional IRA requirements



You originally contributed to a Roth

BUT ...


your income makes you ineligible for a Roth IRA and you want to avoid IRS penalties.



You originally contributed to a traditional IRA

BUT ...


you're within the income limits to get potential tax-free earnings from a Roth.1 View Roth IRA requirements

5 things to know before you start


1. Earnings and losses must be included for the IRS

When you recharacterize, the IRS requires an earnings calculation to account for any gains or losses on the amount you're recharacterizing. The calculation is based on the change in value of your entire account, not just the contribution itself, for period the original contribution was in your account. Don't worry, Fidelity will do the earnings calculation for you.


Keep in mind: Depending on how your IRA performed, the amount you recharacterize is likely to be higher or lower than your original contribution amount. View an example of the calculation




2. Forms needed

Just complete Fidelity's online formLog In Required. You'll need to know the date your original contribution was deposited.




3. You can choose the assets you want to transfer

Tell us whether you want to transfer cash or securities between your IRA accounts when you recharacterize with Fidelity.




4. Deadline to complete

You have until the tax-filing deadline to complete a recharacterization. If you file an IRS extension, you have until the extended tax-filing deadline, normally October 15.



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5. Tax reporting

Since a recharacterization can create a taxable event, the final critical step for you and your tax professional is to report your recharacterization properly to the IRS on your taxes. Here's how Fidelity will support you:


  • Fidelity will create IRS Form 1099-R to report your recharacterization in the year that you recharacterize. The 1099-R also lets the IRS know whether you are recharacterizing a current or prior-year contribution.
  • Fidelity will report the recharacterized contribution to the receiving IRA or Roth IRA in Box 4 of IRS Form 5498 in the year that you recharacterize.
  • Fidelity creates a letter with the details of your recharacterization to help with the reporting process.

You can find more information on recharacterizations in IRS publication 590-A and the instructions for IRS Form 8606.



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