My Charles Schwab friend sent me the following email (adjusted slightly because I received it two days ago).
Two countdowns, one problem: Nobody knows about them.
1. In 73 days, the 2010 Roth conversion opportunity will go into effect, allowing people earning over $100,000 to convert to a Roth IRA and enjoy tax breaks down the line.
2. In just 1 day, on October 15, we reach the deadline for Roth conversion take-backs: if you already switched to a Roth in 2008, you can undo the move (“recharacterize”) and convert your Roth IRA back to a traditional IRA, shrinking your overall tax bill and returning taxes paid with interest.
Schwab’s latest survey found that those most impacted by the 2010 change…
• don’t know about the 2010 Roth conversion rule changes (61 percent),
• are confused about the rules (26 percent find it more confusing than health reform),
• are not planning to convert (72 percent).
I kind of fell down on the job on this recharacterization stuff. For those of you who aren’t sure about recharacterization, it’s the process of reversing the conversion of a traditional IRA to a Roth IRA. I was going to explain the process in a post but I really can’t do a better job than was done in this article.