Ask Kim

Kiplinger

How Tax Reform Might Affect Your Roth IRA Conversion

Kiplinger.com

[QUESTION]I'm thinking of converting money from a traditional IRA to a Roth IRA, but I'm hesitant to make the move in case tax reform reduces my tax rate. Should I wait? --S.L., St. Louis

See Also: 10 Things You Must Know About Roth IRAs

[ANSWER]If you convert the money this year and your tax situation changes, you'll have an opportunity for a do-over. You have until October 15, 2018, to undo a conversion you made in 2017, a process called recharacterization. The money returns to the traditional IRA and you get back the taxes you paid on the conversion (or avoid having to pay the tax bill if you undo the conversion before you file your return). If congressional action means you're in a lower tax bracket next year so the conversion would cost you less, you can reconvert the account in 2018.

"If there's any chance the Roth conversion makes sense, I'd make it now," says Jeffrey Levine, CEO and director of financial planning for the BluePrint Wealth Alliance in Garden City, N.Y. If it turns out not to be a good move because of a change in the tax law, a market decline or whatever reason, he says, then you can recharacterize.

Copyright 2017 The Kiplinger Washington Editors

More from Kiplinger.com

See more stories in this category

Back to Previous Page

Ask Kim

When to Take Your First Required Minimum...

[Question]I turned 70 this year, and I am wondering if I must take an RMD from my IRA this year or if...

Land a Retail Job for the Holiday Season

[Question]I'd like to get a part-time job during the holiday season and earn some extra money. What is...

The Big Pension Decision Military Service...

[Question]I've been reading about the new military blended retirement system. When do I need to decide...

How to Qualify for a Health Savings Account...

[Question]I'm choosing my health insurance policy for 2018 during open enrollment now. How high does...

A Child-Care Tax Break for Working Parents

[Question]My husband and I will be having our first baby this spring, and we'll be paying for child...

Next Page >
Provided by Kiplinger