A Roth conversion: When you take an IRA and convert it into a Roth, paying taxes today with the assumption that waiting to pay taxes in the future will mean higher tax rates.
Appeals to: People in a low tax bracket, people who believe tax rates are only going up, investors who are wealthy and would like the benefits of passing money to heirs in a Roth IRA.
A recharacterization: Essentially, taking back the conversion so that taxes aren't paid and the money returns to a traditional IRA.
Appeals to: People who unexpectedly fell into a lower tax bracket, meaning they paid higher taxes during their conversion than they would if they converted today, or people who converted assets to a Roth at a point when the market was a lot higher than it is today, meaning they owe tax calculated on that larger portfolio value.
The deadline: Oct. 17, 2011, to recharacterize a conversion that took place in 2010.
The details: Form 8606 at IRS.gov or your investment adviser or tax accountant.
New York City turns to AI-powered scanners in push to keep guns out of the subway system
North Carolina regulators says nonprofit run by lieutenant governor's wife owes the state $132K
![Brazilian Economy Minister Fernando Haddad attends a news conference to review the G20 Finance Ministers and Central Bank Governors Meeting, in Rio de](https://arc.stimg.co/startribunemedia/ZITUXGSK3JCFFOB5T6I5UV7URA.jpg?h=91&w=145&fit=crop&bg=999&crop=faces)