If your 2012 Roth IRA was a conversion, you have until October 15 to reverse it
If you converted a traditional IRA into a Roth account last year and are now unhappy with the results, you can reverse the conversion as long as you get it done by October 15. Here’s what you need to know as this deadline rapidly approaches.
When you converted your traditional IRA into a Roth IRA last year, the transaction was treated as a distribution from the traditional IRA followed by a contribution of the distributed amount to the Roth account. So the conversion triggered a 2012 federal income tax bill (and maybe a state income tax bill, too) based on the traditional IRA’s value on the conversion date.
Before you make this decision, call your tax lawyer!
Ronald J. Cappuccio, J.D., LL,M.(Tax)
Counsellor at Law