The deadline for the 2011 Roth conversion is coming up.
You have until October 15, 2012 change your mind and get back tax paid on the conversion. Changing your mind can save you money if the balance in your Roth has fallen since you did the conversion.
If you have already filed you 2011 return, you can file Form 1040-X with the Service to recover the tax you paid on the conversion.
After filing Form 1040-X you must wait 30 days before you can reconvert the funds in the regular IRA back to a Roth IRA. It may pay to convert an IRA to a Roth in 2012 — however, waiting until 2013 can trigger the 3.8% medicare tax on unearned income. This would hit individuals with a modified adjusted gross incomes over $200,000 and couples with adjusted gross incomes above $250,000.
The Roth conversion income isn’t hit by the 3.8% tax, but it is counted in AGI and it can subject more of your unearned income to the tax.
To discover how we can help you with the Roth conversion, please give us a call at 401.254.0151. We look forward to hearing from you.