What is an IRA recharacterization?

An IRA recharacterization is when you contribute to one type of IRA but afterward you want to switch your contribution to be toward the other type of IRA.

If you recharacterized, you did one of these two things:

• You switched your Roth IRA contribution to be a traditional contribution instead.
• You switched your traditional IRA contribution to be a Roth contribution instead.

A recharacterization is NOT the same as a rollover or conversion.

To recharacterize a contribution, you must generally tell the trustee of the financial institution holding your IRA to transfer the amount of the contribution, plus earnings, from the first IRA to a second IRA (either a Roth or traditional) in a trustee-to-trustee transfer.

If you recharacterize your contribution, you must do all three of the following:

• Include in the transfer any net income allocable to the contribution (including losses).
• Report the recharacterization on your tax return for the year during which the contribution as made.
• Treat the contribution as having been made to the second IRA on the date that it was actually made to the first IRA.

If this is done by the due date for filing your tax return (including extensions), you can treat the contribution as made to the second IRA for that year (effectively ignoring the contribution to the first IRA).

For more information, see Publication 590-A .

What is the difference between an IRA conversion and an IRA recharacterization?