Reconversion

AAA

DEFINITION of 'Reconversion'

A method used by individuals to minimize the tax burden of converting an IRA by recharacterizing Roth IRA-converted amounts back to a Traditional IRA and then converting these assets back to a Roth IRA again. Be aware that the IRS released regulations in 1999 placing limits on reconversions.

INVESTOPEDIA EXPLAINS 'Reconversion'

Investors who want to reconvert to a Roth IRA must wait until the beginning of the new tax year following the tax year they recharacterized or a minimum of 30 days after the recharacterization is completed, whichever is later. For example, if you recharacterized a conversion contribution on December 15, 209, you would not be able to reconvert until January 15, 2010. If you reconvert prior to these limits, the reconversion will be deemed a failed conversion by the IRS, and if not corrected may result in an excess contribution to the Roth IRA.

RELATED TERMS
  1. Spousal IRA

    A type of individual retirement account that allows a working ...
  2. In-Service Withdrawal

    A withdrawal made from a qualified plan account before the holder ...
  3. Individual Retirement Account - ...

    An investing tool used by individuals to earn and earmark funds ...
  4. IRA Adoption Agreement And Plan ...

    A contract between the owner of an individual retirement account ...
  5. Roth IRA Conversion

    A reportable movement of assets from a Traditional, SEP or SIMPLE ...
  6. Ordering Rules

    The order in which Roth IRA assets are distributed. Assets are ...
Related Articles
  1. Recharacterizing Your IRA Contribution ...
    Taxes

    Recharacterizing Your IRA Contribution ...

  2. Did Your Roth IRA Conversion Pass or ...
    Retirement

    Did Your Roth IRA Conversion Pass or ...

  3. An Overview Of The Pension Benefit Guaranty ...
    Retirement

    An Overview Of The Pension Benefit Guaranty ...

  4. Keeping Track Of Retirement Plan Assets
    Retirement

    Keeping Track Of Retirement Plan Assets

comments powered by Disqus
Hot Definitions
  1. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  2. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  3. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  4. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  5. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  6. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
Trading Center