I converted a traditional IRA to a Roth in 2011 but the conversion is pushing me into the next tax bracket. There's a good chance our income will drop by a fair amount during this year, so it appears to make a good case to undo the conversion and reconvert it next year. However, I have also made contributions to the Roth for 2011 as well as this year so I'm kind of curious how that works as I can't seem to find that particular scenario after doing some searching. Just curious if anybody has done this before. Thanks
It might save a grand or two, depending on which bracket we fall in to this year. We could drop 8-10% in effective tax levels if one income goes away for the full year. It's not a huge conversion, but it seems stupid to throw away hundreds of dollars for a little bit of paperwork. At first glance, it seems that I could just withdraw all contributions made after the conversion and then re-characterize that balance back to the IRA. That's the way it sounds for IB anyway as they only do full conversions.
sounds doable and you don't even have to reverse the whole amount http://www.mainstreet.com/article/retirement/ira/recharacterize-your-roth-ira-conversion