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March 3, 2009

Can I recharacterize only a percentage of the contribution I made to my Traditional IRA?

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Can I recharacterize only a percentage of the contribution I made to my Traditional IRA?

Can I recharacterize only a percentage of the contribution I made to my Traditional IRA? Or do I need to recharacterize the entire amount? I want to have a portion applied to my Roth IRA.

Yes. You can recharacterize a percentage of your IRA contribution. Bear in mind that amounts being recharacterized must include any net income attributable (NIA) to the amount. Computation of the NIA requires use of the formula provided here http://retirementdictionary.com/definitions/netincomeattributablenia.
As a reminder, the deadline for completing your recharacterization is your tax filing due date. If you filed your tax return by the due date, or filed for an extension by the due date, you receive an automatic 6-month extension to complete the recharacterization. For calendar year tax filers, this extended deadline would be October 15[1].


[1] The deadline is extended to the next business day, if October 15 falls on a non-business day.

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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