Dear Garden State Trust Company:
Last year I converted my traditional IRA to a Roth IRA. However, now that I see the income tax that will be due, I’m not so sure it was a great idea. Can I change my mind?
You have until October 15, 2018, to recharacterize your 2017 Roth IRA conversion, to turn it back into a traditional IRA.
But that option is not available for conversions for 2018 and later years.
The tax reform legislation enacted last December changed the rules for Roth conversions from traditional IRAs, SEPs and SIMPLE plans. After January 1, 2018, such conversions are irrevocable once made. The legislative language was ambiguous, and some exeprts were concerned that it might retroactively affect 2017 conversions as well.
In January the IRS issued a clarifying Q&A on the subject. The new law does not apply to 2017 conversions, so you are free to reverse course.
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