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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15747
Experience:  15years with H & R Block. Divisional leader, Instructor
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In 2016 we consolidated some of my wifes retirement

Customer Question

in 2016 we consolidated some of my wifes retirement accounts. We transferred $13,000 from a SEP IRA account into an existing Roth IRA account. We had intended to transfer into an existing solo 401K account. Our error. I asked the mutual fund company if we could transfer the $13k from the roth ira into the intended solo 401K to correct the issue and avoid being taxed on the $13k before the April tax deadline. I was told that the mutual fund company could not or would not do that. I had written an email to IRS to ask for guidance twice and have not been responded too. I am looking for options.
JA: The Accountant will know how to help. Is there anything else important you think the Accountant should know?
Customer: the accounts are my wife's. She is a registered nurse. Her income comes from three separate work areas. Two are part time nursing positions as an on staff nurse. The third and largest producer of income is as a Nurse working as an independent contractor. The work as an independent contractor is why we have had the SEP and solo 401k accounts. We closed the SEP with intention of just contributing in the future to the 401K. The Roth is existing account and due to our combined income we are not permitted to constribute directly to t hat account.
Submitted: 9 months ago.
Category: Tax
Expert:  Robin D. replied 9 months ago.

Hello, I'm Robin. Welcome to JustAnswer. I'm reviewing your question now and typing up my reply. I'll post that in just a few moments.

Expert:  Robin D. replied 9 months ago.

The process of reversing a Roth IRA conversion is known as recharacterization. It needs to be completed by the last date, including extensions, for filing or refiling your prior-year tax return, which is typically on or about October 15 if you filed for extension or April 15 if you file timely.

You can generally recharacterize all or a portion of what you converted. And if you change your mind again, assets that you recharacterize to a traditional IRA can be reconverted to a Roth IRA in the next tax year after the conversion or 30 days after the recharacterization, whichever is later.