Can I convert my Traditional IRA to a Roth IRA?

Yes. You can convert your Traditional IRA to a Roth IRA if your adjusted gross income (single or married filing a joint return) does not exceed $100,000 in the year of conversion. If you are married filing a separate return, you are not eligible to convert.

Is a conversion taxable?

Yes. When you convert a Traditional IRA to a Roth IRA, all of your deductible contributions plus the earnings become taxable to you. In other words, any contributions you have not paid taxes on previously, you must pay taxes on as a part of the conversion process. The amount you convert is not counted for the $100,000 income limit established for Roth IRAs, but is included as income for all other purposes. Unlike in a Traditional IRA when you take money out before the age of 59 ? and must pay a penalty, when you covert a Traditional IRA to a Roth IRA before age 59 ? there is no 10% penalty due on the taxable portion of the conversion.

What is a recharacterization?

Recharacterization is the term the IRS has given to the process of undoing a Roth conversion, or switching a Roth annual contribution to a Traditional IRA or vice versa. There are several reasons to request a recharacterization:

• Failed conversion - you realize that you are not eligible for a conversion to a Roth IRA and need to "undo" it
• Successful but unwanted conversion - you are eligible for the conversion, but you decide you don't have the money to pay taxes on it, so you choose to "undo" it
• Annual contribution to a Traditional IRA - you made a contribution to a Traditional IRA, but realize you want it to be a contribution to a Roth IRA
• Annual contribution to a Roth IRA - you made a Roth contribution, but now realize your income is too high, or that a Traditional contribution is better for your situation

Are there rules to follow in requesting a recharacterization?

Things to keep in mind when recharacterizing contributions:

• If the contribution is moving from the Traditional IRA to the Roth IRA, no tax deduction can be taken
• The contribution plus any earnings on the contribution must be moved
• The recharacterization must be completed by your tax return due date, including extensions

What happens if I convert my Traditional IRA and then realize that I am ineligible to convert?

You can recharacterize the conversion assets back to a Traditional IRA if you do so by your tax filing deadline, including extensions. Please read all of the FAQ's in this section for more on recharacterization.

How can I request a Conversion or Recharacterization at BUYandHOLD?

Go to the View Your Account page and click on Maintenance. You will find the Printable Forms section. From there you can select the appropriate form to print, complete, sign and send to the address or fax number indicated on the form.