Many individuals converted their traditional IRA to a Roth IRA in 2010. It seemed like a great idea but then the stock market went down. Now, some of these individuals owe tax on money they no longer have.
You can actually get a do-over: You can reverse (recharacterize) your Roth back to a traditional IRA. The Smart Money blog has more.
Does your descriptions apply to IRS tax law only? Or has California FTB adopted the same policy? If so, when did the bill pass?
As of 1998, recharacterization bill in California was vetoed. Wondering if the law has changed since then?
Thanks for your reply.
A legal analysis from the FTB on this matter is here. My understanding (which you should verify with your own tax professional) is that while the recharacterization bill was vetoed (in 1998), California does conform to federal law in this aspect of the Tax Code.