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Recharacterizing a Roth IRA Conversion

If you previously converted a Traditional IRA to a Roth IRA, you can undo the conversion by recharacterizing the account. For a 2012 conversion, the deadline for a recharacterization is October 15, 2013.

You may wish to recharacterize your Roth IRA if:

  • The value of the investments in your converted Roth IRA declined, and you don’t want to pay taxes based on the value at the time of conversion
  • You don’t have enough cash on hand to pay the taxes
  • Your taxable income ended up being higher than you expected and/or the additional income from the Roth IRA conversion bumped you into a higher federal income tax bracket
  • You’ve determined that your taxable income in retirement will likely be lower than you expected, reducing the potential benefits of the tax-free distributions from a Roth IRA

In any case, there are no specific reasons required by the IRS for a Roth IRA recharacterization. You can recharacterize your Roth IRA for any reason.

Please note that in order to avoid paying the taxes on your conversion, the entire recharacterization transaction must be completed by the last date, including extensions, to file or re-file your prior year tax return.

If you’re ready to take action, you can download, fill out, and mail the Fidelity IRA Request for Recharacterization form found here, or give us a call at 800-FIDELITY and we’ll help you get started.

To learn more about Roth recharacterization, consult this Fidelity Viewpoints article: Rethinking Your Roth IRA Conversion.

Fidelity Brokerage Services, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917


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