In order to contribute to any IRA you need to qualify. You must have compensation of wages or self-employment. Due to a new law recharacterization of ROTH conversions is not an option but you can recharacterize IRA contributions. Recharacterizations of either a ROTH or a Traditional IRA must be valid in their own right. If a rollover was accidentally put into the wrong IRA a recharacterization would be necessary. Another example of recharacterization from a Roth IRA to a traditional IRA is if your income did not qualify for a ROTH IRA.
Key Takeaways:
- Financial experts often see too many people untoward or ineligible IRA contributions.
- To qualify for the IRA contribution, one must have steady income and file it by April 15.
- In addition, people should not have a limits on their income and can’t be older than 70 1/2.
“Keep in mind that re-characterizations can be done for reasons large or small, including clients who simply change their mind about their retirement savings strategy.”
