Retirement Plan Recharacterization means according to Reg. Sec. 1.408A-5 that if you make a contribution to one type of IRA (Individual Retirement Account)  you may be able to treat the contribution as though it had been made to a different type of IRA. This is basically considered a correction that can be significant for a wide variety of reasons.

One common reason that I’ve seen is if you converted a traditional IRA to a Roth IRA you may want to recharacterize the Roth IRA back to a traditional IRA if the value of the assets in the Roth IRA has declined between the conversion date and the due date for the tax return reporting the conversion.

This is because the amount you would have to include in income as a result of the Read More