You Only Have Until October 17th to Undo Your Roth IRA Conversion







There’s no sense in paying higher taxes on an account value that has lost its value right?

If you converted to a Roth IRA in 2010 and the value of that converted money is now lower (and it probably is because the miserable stock market performance), you can undo the Roth IRA conversion and get the taxes you paid on the original conversion back.

Voilà – your conversion is gone and you get your tax money back.  Sound too good to be true? Here are the steps you need to follow:

Step #1: Determine what the value of your original Roth IRA conversion is today.

Step #2: If the value is lower, calculate how much you can save by undoing the conversion. Ara Oghoorian, CFP® gives an example of how much you could potentially save and how to calculate your expected savings.

Step #3: Call your brokerage account and tell them that you would like to undo your Roth IRA conversion.  Your brokerage firm will need to process this for you and give you the paperwork necessary to make it official.

Step #4 (Optional): If you still want to convert back to a Roth IRA (yet again), you can do it 30-days after you “undo” the original conversion.  Say it isn’t so!

Jim Blankenship, CFP® provides additional detail for those learning to see how they can make this strategy work in your favor.

Now that’s advice that saves you money!

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