I recharacterized my 2007 Roth IRA contribution that I made in March 2007 to a traditional IRA as I need the deduction but my $4,000 contribution is now down to $3500. Does this mean I have to deposit another $500 to bring my balance back up to $4,000 or will the recharacterization move to the traditional as current value of $3500 with a basis of $4,000? Thanks in advance to all who respond.
No, you are not required to add back $500, and the recharacterization will move to the traditional IRA as current value of $3,500, with a basis of $4,000.
I am not sure why you recharacterized your Roth IRA?? I hope you did the proper calculation to determine whether or not it was prudent to do so, consulting a tax adviser is very important to determine whether this strategy is beneficial to you in the long term!
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