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Ask a Trust Officer- Roth Conversions

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Dear Trust Officer:

Last year I converted my traditional IRA to a Roth IRA.  However, now that I see the income tax that will be due, I’m not so sure it was a great idea.  Can I change my mind?—Second Thoughts

 

Dear Second:

You have until October 15, 2018, to recharacterize your 2017 Roth IRA conversion, to turn it back into a traditional IRA.

But that option is not available for conversions for 2018 and later years. 

The tax reform legislation enacted last December changed the rules for Roth conversions from traditional IRAs, SEPs and SIMPLE plans.  After January 1, 2018, such conversions are irrevocable once made.  The legislative language was ambiguous, and some experts were concerned that it might retroactively affect 2017 conversions as well.

In January the IRS issued a clarifying Q&A on the subject.  The new law does not apply to 2017 conversions, so you are free to reverse course.

 

Do you have a question concerning wealth management or trusts?  Send your inquiry to  (trustofficer@bankname.com).

(February 2018)

© 2018 M.A. Co.  All rights reserved.

 

The information contained within our Articles Library does not constitute legal, tax or investment advice by Country Club Trust Company. 

For legal, tax or investment advice, the services of a competent professional person or professional organization should be sought.

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Country Club Trust Company

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1 Ward Parkway • Kansas City, MO 64112 • 816-751-4200

Trust and Investment Services:
• Are not insured by the FDIC or any other federal government agency.
• Are not deposits of, nor guaranteed by, the Trust Company or any Trust Company Affiliate.
• May lose value.