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Level 2

Converting a Roth IRA back to a Traditional IRA (within the same tax year)

Does anyone know if this is possible?

 

After entering the amount converted from a Traditional IRA to a Roth IRA, the Premium Tax Credit (PTC) went away.  It now appears that I owe not only the tax on the converted amount (from traditional to Roth) I now need to repay the PTC.

 

The only way I see to avoid having to repay the PTC is to dissolve the Roth conversion.

 

Anyone have any knowledge of this tax situation?

1 Best answer

Accepted Solutions
Highlighted
Level 15

Converting a Roth IRA back to a Traditional IRA (within the same tax year)


@lisaannsala wrote:

 

I made the conversion without realizing the consequence, thus, I would like to just roll the Roth funds back into the IRA account they came out of.  


Unfortunately the Tax Cuts and Jobs Act (TCJA) prohibited that a for any conversion after Jan 1, 2018.   Once in the Roth, it cannot be put back.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

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4 Replies
Highlighted
Level 15

Converting a Roth IRA back to a Traditional IRA (within the same tax year)

Unfortunately a Traditional IRA distribution, whether converted or not, is taxable income, unless  there was non-deductible basis in the IRS to offset some or all of the tax.    That taxable income will add to your AGI and the PTC is based on your AGI.

 

What do you mean "back to a Traditional IRA"?   Once converted, recharacterizations of Roth conversions are prohibited, and a Roth can never be converted to a Traditional IRA.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
Highlighted
Level 2

Converting a Roth IRA back to a Traditional IRA (within the same tax year)

What I mean by "back to a traditional IRA" is that the funds WERE IN a traditional IRA. Then the funds were converted to a Roth IRA. 

 

Upon completing 2019 taxes, I discovered that by adding those funds to the AGI to be taxed, the PTC disappeared and that tax credit needs to be repaid also.

 

I made the conversion without realizing the consequence, thus, I would like to just roll the Roth funds back into the IRA account they came out of.  

Highlighted
Level 15

Converting a Roth IRA back to a Traditional IRA (within the same tax year)

You used to be able to do this, but your Congress recently  took away that option.

Highlighted
Level 15

Converting a Roth IRA back to a Traditional IRA (within the same tax year)


@lisaannsala wrote:

 

I made the conversion without realizing the consequence, thus, I would like to just roll the Roth funds back into the IRA account they came out of.  


Unfortunately the Tax Cuts and Jobs Act (TCJA) prohibited that a for any conversion after Jan 1, 2018.   Once in the Roth, it cannot be put back.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

View solution in original post