Has Your 2012 Roth-Converted IRA Declined in Value?

If you converted your traditional IRA to a Roth IRA in 2012 and paid (or will pay) the tax on the conversion and then watched the value of the account decrease due to an unexpected poor investment performance, you still have an opportunity to do something about it.

If you filed your return on time or are on extension, you automatically receive a 6-month extension from the return’s original due date to re-characterize the Roth account back to a traditional account, thereby avoiding having to pay taxes on IRA values that have evaporated. After making the re-characterization, you must wait 30 days before reconverting the IRA back to a Roth.

However, the deadline for both completing your re-characterization and filing or amending your 2012 return is October 15, 2013. If you have questions or wish to implement this strategy, you will need to call our office right away.