Life and Death Planning for Retirement Benefits

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254 Life and Death Planning for Retirement Benefits
recharacterizing the account, he can recharacterize just the Roth IRA that holds that asset class,
and leave the other Roth IRAs alone. If using this strategy, the assets can be moved from a single
traditional IRA directly into the multiple destination Roth IRAs; it is not necessary to first divide
the assets into multiple traditional IRAs then convert those.
5.6.05 Deadline for Roth IRA contributions and conversions
The various deadlines for contributions, conversions, corrective distributions, and
recharacterizations are extremely confusing. Some deadlines are based on the calendar year end,
some on the extended due date of the return, and some on the unextended due date; and some of
the deadlines qualify for an automatic extension—but you do not get the “automatic” extension
unless you ask for it!
A. Deadline for “regular” contribution. Starting with the easiest one: The deadline for
making a regular contribution to a Roth IRA for a particular year is the same as
the deadline for contributing to a traditional IRA, i.e., the unextended due date of the tax
return for that year, in other words, for most people, April 15 following the year in question.
Reg. A-2(b),
For example, a contribution “for” the year 2009 may be made at any time after December
31, 2008, and before April 16, 2010. When a participant makes a regular IRA contribution between
January 1 and April 15, the IRA provider must ask which year it is for, since between those dates
it could be for either the year in which the contribution occurs or the prior year.
B. Deadline for “conversion” contribution. Conversions are slightly more complicated.
Because the conversion is technically a “rollover” (see A), A)), a
conversion contribution is tied to the traditional plan distribution that is being “rolled over.”
Therefore a Roth IRA conversion that is supposed to be “for” the year 2010 must be tied
to a distribution that occurs in the calendar year 2010. The due date of the 2010 return is
irrelevant. A distribution made from a traditional plan in the calendar year 2010, if it is to
be contributed to a Roth IRA, must be so contributed within 60 days after the date of the
distribution. Reg. A-1(b)(1). See and
The ability to recharacterize a “Year 1” IRA contribution until October 15 of “Year 2” (see
does not create an extended right to do Roth conversions between January 1 and October
15 of Year 2 that will count as Year 1 conversions.
Meaning of “April 15”
The deadline for filing an individual’s income tax return is the 15th day of the fourth
month following the end of the individual’s taxable year. That means April
15th for most people. However, the actual deadline will be a bit later if April 15th falls
on a weekend or holiday. Also, the deadline may be extended for individuals
in an area affected by a disaster; and of course the deadline is different for an
individual whose taxable year is not the calendar year. In this book, “April 15” is used
as shorthand for “the unextended due date of the individual’s income tax return for the
year in question, whatever that may be.”