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Strategies & Market Trends : IRS, Tax related strategies--Traders
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To: Jon Tara who wrote (1328)4/7/2001 3:28:10 PM
From: Harry Sharp  Read Replies (1) of 1383
 
IRA conversion question:

I would like to take advantage of the down market to minimize my hit on taxes for money coming out of my IRA. For simplicity sake, say, I convert 100 shares of Microsoft from my IRA to my ROTH now at $55 and later this year the market drops more and MSFT is at $40. Can I convert another 100 shares at $40? And further say it continues to $25, can I convert yet another 100 shares at $25? Question one: can I do multiple conversions from my IRA to my Roth in the same year?

If the answer above is yes then I have another question: The rules say that you can only recharacterize back from a Roth to an IRA once a year. Question two: Must I recharacterize all conversions for the year or can I pick which shares to return to the original IRA?

My tax accountant thinks yes to #1 and that I can pick which shares to undo in #2 but didn’t know for sure and would charge to research it. TD Waterhouse is my broker and I called five different people there, two said no to multiple conversions in the same year and three said yes I can do multiple conversions throughout the year and further I can pick which shares to return. I’d like to get a warmer feeling before being locked out of further conversions for the rest of the year. Can anyone shed light on this?
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