I’ve recently gotten a few questions about the deadline for a Roth IRA conversion. The answer is that it depends on what, exactly, you want to know the deadline for.
The shortest answer is that, for any given year, the deadline for a Roth IRA conversion is December 31 of that year. (Note: This is different from IRA contributions, which can be made up until April 15 of the following year.)
There are a few other Roth conversion-related deadlines you may want to know about, though.
Income Limits Are Gone for Good
As of 2010, the income limits for Roth IRA conversions disappeared. They are not scheduled to come back. In other words, no matter your income level, Roth conversions are not “do it in 2010 or miss your chance.”
Why 2010 Is Special
December 31, 2010 is the deadline, however, for the special option to delay payment of the tax on a Roth conversion. That is, for 2010 Roth conversions, if you choose to do so, you can claim 50% of the converted amount as income in 2011 and the other 50% in 2012.
Beginning in 2011, Roth conversions will go back to working like normal — if you convert in a given year, you’ll have to claim the converted amount as income in that same year.
Roth Conversion Recharacterization Deadline
In case you’ve never run across the term before: A “Roth conversion recharacterization” is basically a do-over. If you convert an amount from a traditional IRA to a Roth IRA, you’re allowed to undo the whole thing as long as you don’t wait too long.
To do so, you’ll have to:
- Notify the custodian(s) of your traditional IRA and your Roth IRA of your intention to recharacterize the conversion,
- Transfer the amount in question from the Roth IRA back to the traditional IRA, and
- If you’ve already filed your tax return for the year of the conversion, you’ll have to amend that return.
The deadline for recharacterizing a Roth IRA conversion is October 15 of the year following the conversion.
Just Because You Can…
One last point: Just because you can convert your IRA to a Roth IRA doesn’t mean you should convert it.