In the beginning of the year, I made my annual $5500 contribution (after taxes) to my Traditional IRA because I anticipated I would not be eligible to contribute to my Roth IRA. Since I got laid off and did not work for several months during 2017, I am well within the AGI contribution ranges for a Roth IRA. Would there be any tax implications of recharacterizing and moving the $5500 over to my Roth IRA since it would occur within the same calendar year? Also would I just re-characterize the $5500 or would I need to figure out how much this money grew and move that amount as well?
If you recharacterize the 2017 traditional IRA contribution to be a Roth IRA contribution instead, you won't have any traditional IRA deduction or nondeductible traditional IRA contributions reported on your tax return. Recharacterizing your $5,500 contribution requires that the transfer of the $5,500 to the Roth IRA be accompanied by any gain or loss attributable to the $5,500 being recharacterized. (The rate of gain of loss is calculated over the entire account.) If there was a gain, after the recharacterization the gain will be a Roth IRA gain rather than a traditional IRA gain. Normally your IRA custodian will calculate the gain or loss and transfer the appropriate amount to accomplish the recharacterization of the $5,500; be sure to specifically request a recharacterization.