I recharacterized my Roth into a traditional IRA in the amendment of 2018 tax return. Does 9100 relief, the automatic extension, apply for recharacterization? Thank you.

[Anonymous]

The term “election” for which 9100 relief is available is defined as “an application for relief in respect of tax; a request to adopt, change, or retain an accounting method or accounting period” (Treas. Reg. § 301.9100-1(b)). This definition is broader than most taxpayers would think. However, the term “election” does not include an application for an extension of time to file a return.

a recharacterization could be as late as a valid extension.  if  you don't have one  and did it after 4/15, it was invalid.  so now you would have to amend the amended return.    

[sarahung0816]

I recharacterized my Roth IRA on April 16 this year. Now I am amending the tax return to reflect this recharacterization. Does 9100 relief apply in my amendment? Thank you.

[Anonymous · Accepted solution]

recharacterization is an (statutory) election under IRC section 408 that can be made up until the extended due date.  reg 301.9100-2(b) allows for recharacterization as late as six months after the unextended due date of the return as long as the statutory election can be be made as late as the extended due date .  its an automatic six month extension so no 4868 needed to be filed.    also to be allowed to amend, the 1040 must be timely filed.

Write  “FILED PURSUANT TO § 301.9100-2”  at the top of the 1040-X (part of the regulatory requirements to obtain the automatic (?) extension.     

I will not even try to explain why the statement is necessary since the extension is automatic 

[sarahung0816]

Thank you!

[macuser_22]

@sarahung0816  This is assuming that you recharacterized a 2018 Roth IRA *contribution* to a Traditional IRA and it was not a Roth *conversion* which can no longer be recharactorized due to the new tax laws.

Be sure to report the contribution recharacterization correctly on your 2018 amended return.  You should receive a 2019 1099-R by Jan. 31, 2020 with a code "R" in box 7 to report it.  

A 2019 1099-R with a code R in box 7 (Recharacterized IRA contribution made for 2017 and recharactorized in 2018) will tell you that you must amend 2018.

A code R 1099-R does nothing whatsoever if entered into the 1099-R section of an amended 2018 return. It does not get sent to the IRS and nothing goes on the tax return at all. The only purpose of the 1099-R is to report the recharacterization to the IRS, but it still must be reported on your 2018 tax return.

The box 1 on the 1099-R will report the total recharacterized amount (contribution plus earnings) but it does not separately report the earnings and box 2a must be zero.

The proper way to report the recharacterization and earnings which is to enter the 2018 IRA contribution in the IRA contribution interview section and then say yes to "Did you switch from a Roth to a Traditional IRA - recharacterize".

The amount The amount of the original Roth contribution must be entered - not any earnings or losses.

Then TurboTax will ask for an explanation statement where it should be stated that the original $xxx.xx plus $xxx.xx earnings (or loss) were recharactorized.

There is no tax or penalty on the before-tax earnings since the earning were simply switched into the recharactorized account.

That is the only way to prepare and attach the proper line 4a explanation statement for a code R 1099-R.

Enter IRA contributions here:
Federal Taxes,
Deductions & Credits,
I’ll choose what I work on (if that screen comes up),
Retirement & Investments,
Traditional & Roth IRA contribution.

OR Use the "Tools" menu (if online version under My Account) and then "Search Topics" for "ira contributions" which will take you to the same place.

Since the after-tax Roth contribution is now a Traditional IRA contribution it can be either a before-tax deduction if your MAGI allows a deduction which might result in an additional 2018 refund, or it will be an after-tax contribution reported on a 8606 form (line 1 & 14) as a "basis" in the Traditional IRA that will reduce the tax of future distributions.

[sarahung0816]

I am filing amendment through TurboTax before Oct. 15 this year. Do I still need to fill out 1099R next year? Thank you.

[macuser_22]

There is no reason whatsoever to amend before you receive the actual 1099-R in January.   You have until Oct 15, 2019 to *make* the recharacterization but you have 3 years to amend to report it.  The 2019 1099-R issued by the IRA trustee is what tells the IRS that you timely did the recharacterization, not your tax return.

If you amend before receiving the 1099-R and the IRA trustee used a different box 7 code, or the box 1 amount is different from what you expect it to be then you would need to amend the amendment which is a sticky process and could not be done utility the first amendment is processed by the IRS which can take 4 or more months.   (Even if you mailed an amended 2018 return today it will probably will not be processed until Feb-March, 2020.)

[sarahung0816]

Does it mean I should just recharacterize my Roth IRA through my bank and I will automatically receive a 1099R next year? Without filing the amendment, do I need to do anything to let IRS know about the recharacterization before I receive 1099R? Last, I already e-filed my state amendment (which contained nothing) but haven’t mailed out the federal amendment yet. Should I hold off on mailing out the federal amendment? If so, is it possible to recall my state amendment through turbo tax? Thank you.

[macuser_22]

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@sarahung0816 wrote:

Does it mean I should just recharacterize my Roth IRA through my bank and I will automatically receive a 1099R next year? Without filing the amendment, do I need to do anything to let IRS know about the recharacterization before I receive 1099R? Last, I already e-filed my state amendment (which contained nothing) but haven’t mailed out the federal amendment yet. Should I hold off on mailing out the federal amendment? If so, is it possible to recall my state amendment through turbo tax? Thank you.

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Your original questions said:  "I recharacterized my Roth into a traditional IRA..."  meaning that you already did the recharacterization with your bank.    Yes, you will receive a 1099-R for the recharacterization form the bank if done before the extended due date.  

Why did you amend a state return if it changed nothing? 

Did you enter the recharacterization as I outlined above so that it ether added a deduction or produced a 8606 form if not deductible?

I suggest that you complete the recharacterization with you bank before the time limit expires if you have not already done so and then wait until the 1099-R is received before amending.

[sarahung0816]

Thank you. Yes, I had recharacterized my Roth with my bank on April 16, 2019. I have not yet received 1099R. I amended both state and fed tax returns through turbo tax and already e-filed the state one (nothing was changed when I follow through the online instructions and I just added a note that I recharacterized my Roth to a traditional IRA). I have not yet mailed out the federal one. Should I do anything with my state amendment? Can I recall it? Thank you. 

[macuser_22]

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@sarahung0816 wrote:

Thank you. Yes, I had recharacterized my Roth with my bank on April 16, 2019. I have not yet received 1099R. I amended both state and fed tax returns through turbo tax and already e-filed the state one (nothing was changed when I follow through the online instructions and I just added a note that I recharacterized my Roth to a traditional IRA). I have not yet mailed out the federal one. Should I do anything with my state amendment? Can I recall it? Thank you. 

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Banks mail the 1099-R by Jan. 31, 2020.  You cannot recall a state amendment once mailed.  It may or may not change the taxable amount of refund depending if the now Traditional IRA contribution is deductible or non-deductible.  If deductible then you would probably get  an additional Federal Refund or if non-deductible include a 8606 form to report the non-deductible amount.   Whether that is required for the state or not would depend on the state and if the state allows IRA contribution deductions.