Since Roth IRAs began in 1997 the Federal Government has allowed you to convert your traditional IRA into a Roth as long as you paid taxes on the amount moved. Any penalties were waived. For some, the conversion made sense because all earnings in a Roth IRA are tax-free if withdrawn after age 59 ½.

Some who converted decided it wasn’t right for them and they moved from the Roth back to the traditional IRA. The official term is recharacterization and it’s treated as if the conversion never happened. But with the passage of the new tax law recharacterizations went away beginning January 1, 2018.

However, if you converted your traditional IRA into a Roth in 2017 and wish you hadn’t, you have a small window to unwind the conversion and move the funds back, but the window is closing.

The IRS website says you can recharacterize the funds you moved into a Roth IRA in 2017 as long as you do it by October 15, 2018, because the rules for last year still apply. You can move the funds back into a traditional IRA—no taxes, no penalties.

Even if you’ve filed your 2017 tax return and paid the conversion tax, you can file an amended tax return showing the recharacterization and request the tax refund plus interest.

The tax act doesn’t change other IRA rules. You can still transfer a traditional IRA contribution to a Roth or a Roth contribution to a traditional IRA as long as you do it by the tax filing date.

What if you want to convert a traditional IRA into a Roth in the future? No problem. You can still do it as long as you pay the taxes. But you won’t have the option of recharacterizing those funds if you decide it was a mistake.

If the recharacterization opportunity applies to you, it’s still a good idea to talk with your tax adviser about the pros and cons before you decide to unwind the transfer.

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