Mark Bole wrote:
- quote -

TOO late, Mark! grin

C$,
H

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Mark Bole wrote:
- quote -

snipped.......

- quote -

Starting at beginning of message you said that I wrote:

For the life of me, I can't find any reply of mine in the thread.

Or is my newsreader tossing out my mail and acting as a censor?

ChEAr$,
harlan

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Oops, I see this an old post from last May that got threaded into a new
post with the same subject, so the timing of my comments is out of
whack. Never mind.

-Mark Bole

Mark Bole wrote:
- quote -

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Harlan Lunsford wrote:
- quote -

Harlan, isn't it too late for that -- deadline was Oct 15th? I think
this is now a failed conversion.


- quote -

Pub 590 says earnings must also be transferred (withdrawn) by the due
date (including extensions) in order to be treated as a contribution not
made -- I recall this is new in the last few years. All earnings, plus
or minus, from the date of contribution or conversion must be
transferred out for a successful recharacterization, whether it happens
before or after April 15th.

- quote -

A Form 8606 will probably be required...

- quote -

6% excise tax on excess contribution not removed by the deadline.

- quote -

But if the failed conversion is left as is, then the RMD was in fact
met, right (since the Traditional IRA is now closed)? Better a six
percent penalty than a 50% penalty. OP also mentions "an IRA", be sure
the RMD calculation takes into account *all* traditional IRA balances.

The money now in the Roth can be withdrawn at any time, tax and penalty
free, from this point forward.


- quote -

I recommend getting the help of a professional for this, preferably
before year-end so that whatever the situation, it doesn't "spill over"
into next year too.

-Mark Bole

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

bearsfo[at]gmail.com wrote:
- quote -

Correct
- quote -

The trustee/custodian should help here.
Actually if said recharacterization had been accomplished before 4/15,
there would be no need to determine those earnings.
- quote -

A simple statement with the return setting forth facts and circumstances
will suffice. This will go with the 1040x as you know.
- quote -

Probably IRS will not assess them; however if they do, just bite the bullet.

- quote -

If she has a really good reason for not remembering to to it, just file
the form 5329, page 2, and follow instructions for not paying the 50%.

Formerly in olden times, one had to pay the penalty and then write a
letter, or rather a plea for mercy, asking for a refund. But now it is
simply accomplished with form 5329 without having to first send in the
money.

This is the case certainly with a timely filed return, and given the
facts and circumstances, I feel sure that IRS won't balk or question the
treatment.
(But don't sue me if they don't! lol)

- quote -

Right.

ChEAr$,
Harlan Lunsford, EA n LA

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

I need some help with Roth IRAs.

I checked my mother’s 2007 tax returns this week and discovered that
she has 2 problems that she needs to correct. First, she did not take
the Required Minimum Distribution for an IRA she had. Second, she
converted that IRA to a Roth IRA (added to an existing Roth IRA
account) and paid taxes on the conversion, but she ended up making
over the $100,000 limit (not including the Roth IRA conversion income)
due to large capital gain distributions by her mutual funds this
year. Below is what I think she needs to do to correct the problem
along with some questions. Please let me know if I’m missing
something. Thanks for your help!

1) Need to recharacterize the amount converted from IRA to Roth IRA
for 2007.

(a) She needs to include earnings that were made after the
conversion. But how does she determine that since it was mixed into
an existing Roth IRA?
(b) Does she need to file any forms saying she is recharacterizing the
Roth amount back to an IRA?
© Does she owe any penalties?

2) Take the required minimum distribution for 2007.
(a) Does she need to file some form saying she did not take the
required minimum distribution for 2007, but is now correcting it?
(b) Does she need to pay the 50% penalty?

3) Amend 2007 tax return.

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >