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jbbmillar
Level 1

Can my current year contributions to a Roth 401k be recharacterized to traditional 401K contributions before year end?

I've just realized my income is probably going to exceed one of the Medicare income related monthly adjustment amount (IRMAA) thresholds, which will add about $2,000.00 ($1K for me and my wife each) to our Medicare cost next year.  I've maxed out my $25K of Roth 401K contributions, but now realize that: if those had been traditional pre-tax 401K contributions, then I probably would stay below the threshold.  Is there any way to convert those Roth contributions back to traditional pre-tax type contributions if it is done before year end?  The taxes paid could be recovered when the tax return is filed.

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Accepted Solutions
DoninGA
Level 15

Can my current year contributions to a Roth 401k be recharacterized to traditional 401K contributions before year end?

See answer here - https://ttlc.intuit.com/community/retirement/discussion/can-i-recharacterize-my-roth-401k-contributi...

You can only recharactorize a Roth conversion from a Traditional IRA back to a Traditional IRA.   (Rechactorized means putting it back to where it came from).

You cannot convert a Roth IRA to a Traditional IRA which is this would be since the Roth is not a conversion  but a rollover from an existing 401(k) Roth.   Since a Roth is after-tax money, converting it to before-tax money cannot be done and is not allowed.

(Note that after Dec 31, 2017 Roth recharacterizations can no longer be done under the new tax law).

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5 Replies
DoninGA
Level 15

Can my current year contributions to a Roth 401k be recharacterized to traditional 401K contributions before year end?

See answer here - https://ttlc.intuit.com/community/retirement/discussion/can-i-recharacterize-my-roth-401k-contributi...

You can only recharactorize a Roth conversion from a Traditional IRA back to a Traditional IRA.   (Rechactorized means putting it back to where it came from).

You cannot convert a Roth IRA to a Traditional IRA which is this would be since the Roth is not a conversion  but a rollover from an existing 401(k) Roth.   Since a Roth is after-tax money, converting it to before-tax money cannot be done and is not allowed.

(Note that after Dec 31, 2017 Roth recharacterizations can no longer be done under the new tax law).

View solution in original post

dmertz
Level 15

Can my current year contributions to a Roth 401k be recharacterized to traditional 401K contributions before year end?

No.  Roth 401(k) contributions have never been permitted to be recharacterized.

Critter
Level 15

Can my current year contributions to a Roth 401k be recharacterized to traditional 401K contributions before year end?

The most likely reason this is not allowed  would be the logistical nightmare for the employer to make the switch ... amending payroll tax returns are a nightmare at best so not allowing the move from 401K Roth to a reg 401K is logical for all involved (employer, IRS & SSA). 

dmertz
Level 15

Can my current year contributions to a Roth 401k be recharacterized to traditional 401K contributions before year end?

More simply, the tax code does not permit changing a Roth 401(k) contribution intentionally made by the employee to be a traditional contribution instead, as is the case here.

 

The only possible way I can see for it to be permissible for a contribution deposited into to a Roth 401(k) account to be moved to a traditional account is if the election provided to the employer by the employee was to deposit the contribution into the traditional 401(k) account but the plan administrator mistakenly deposited it into the Roth 401(k).  Correcting this error on the part of the plan administrator would not be a recharacterization but would instead be a correction of a bookkeeping error.

jbbmillar
Level 1

Can my current year contributions to a Roth 401k be recharacterized to traditional 401K contributions before year end?

Thank you for your replies.  Happily, this is a good problem to have: too much income!

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