Recharacterization to Roth IRA from Traditional IRA

[MKH11222]

I made$6,500 in contributions for 2023 to my Traditional IRA. Then after a week, I changed my mind, submitted IRA recharacterization form to my bank. My bank moved $6,500 to my Roth IRA account.

I was planning to rollover all of my fund in Traditional IRA to Roth IRA next month because it looks like I will be  in low tax bracket this year. However I read I can’t rollover anymore this year because recharacterization is a rollover/conversion. And I have to wait 12 month. Is that true?

Also what forms do I need to submit to report this recharacterization correctly when I file my tax? My bank account page says contribution to Traditional IRA 2023 is $6500 and  contribution to Roth 2023 is $0.  But I moved the $6500 already.. I am confused!

[dmertz]

You misunderstand.  The limitation applies to traditional-to-traditional and Roth-to-Roth IRA rollovers, not to recharacterizations or Roth conversions.

When you enter the traditional IRA contribution into TurboTax and indicate that you "switched" it to a Roth IRA contribution, TurboTax will prompt you to complete the required explanation statement for the recharacterization.  The resulting Roth IRA contribution will not appear elsewhere on your 2023 tax return (unless the contribution appears on Form 8880 because you qualify for a Retirement Savings Contributions Credit).

[MKH11222]

Thanks for the quick reply, I really appreciate it!  I understand now how to report it on Turbotax. However, I still can’t understand if I can move money from Traditional to Roth IRA this year one more time. Is the recharacterization I made considered as a rollover?

[dmertz · Accepted solution]

A recharacterization is not a rollover.

There is no limit on the frequency or amount of Roth conversions (movement of funds from a traditional IRA to a Roth IRA other than by recharacterization).

[MKH11222]

I appreciate the clarification! Thank you so much.