Change IRA contribution from 2007 to 2008

[equinecpa]

If a taxpayer makes an IRA contribution (roth) on 04/15/08 and designates it as a 2007 contribution, is it possible now to change that to 2008?

Failing that, is their any problem with the taxpayer withdrawing the April contribution and recontributing it as a 2008 contribution? I have a client trying to take advantage of the savers credit but didn't realize any benefit from the April contribution.

[joanmcq]

Since it was made in 2008, you can recharacterize it as a 2008 contribution.

[travis bickle]

Can you explain

Since it was made in 2008, you can recharacterize it as a 2008 contribution.

how to do this?

I am not the sharpest knife in the drawer, but I do know that you can "recharacterize" when going from one type of IRA to another type of IRA. However, I do not know how to do that within one IRA between different contribution years.

[equinecpa]

I can't find out "the how" either...perhaps you can't do this. Has anyone here done it before? I contacted the account custodian and they said "no"...but I don't know if that was a "no" you can't, or more of a "no" I don't feel like doing it LOL.

Carolyn

[sea-tax]

This happened to me once when a client insisted that he send the money off for his IRA that I managed. The custodian was American Funds, I simply called as the investment rep and said that the client screwed up and really wanted the 2006 contribution status not the 2005. They gladly made the change.

My advice is get the investment rep involved, he/she may have more pull, as the custodian does not want that person to get upset and start pulling clients money out of their fund family.

[joanmcq]

generally you call up and say 'I want to recharacterize this contribution'. Do you have a reason for doing so, like too high of income to make the contribution, or is you client just screwing around? I saw you mentioned the savers credit, so I' m guessing the reason isn't too high of income. Why not just make another contribution for 2008?

[Burke]

I can't find out "the how" either...perhaps you can't do this. Has anyone here done it before? I contacted the account custodian and they said "no"...but I don't know if that was a "no" you can't, or more of a "no" I don't feel like doing it LOL.Carolyn

If the contribution was made in 2008 but prior to 4/15/08, it can be recharacterized as a 2008 contribution. The custodian has to do this. They make the change in their records, and send a new 5498 to the taxpayer and IRS. Don't accept "no" for an answer. They most certainly can and should. Speak with a supervisor.