Conversion relief under the CARES Act
My daughter who is 56 years old did partial conversions of her IRA to Roth. She did one in Dec. 2019 and another in early January 2020. Hoping to complete the IRA conversions over a three year period. Unfortunately, the timing turned out to be wrong when the Covid-19 pandemic hit us in March. She is now feeling the financial strain with possible loss of her income in the coming months.
Is it possible that she can reverse either one or both conversions to relieve paying the taxes on the conversion amount under any provision of the CARES Act. I understand that any RMD distributed in 2020 can be categorized and potentially used for a roll over. As a 56 years old she is not eligible for any RMD distribution.
Appreciate if you see any other option that we can utilize which would provide some relief from the taxes on the two conversions due for 2019 and 2020 tax years.
Thanks for your help
Permalink Submitted by Alan - IRA critic on Mon, 2020-04-27 13:54
While it would have been consistent with the general intent of the CARES Act, there were no provisions included to allow reinstatement of conversion recharacterizations. It is always possible that another major downdraft in stocks could be considered a reason to consider this in future relief bills. RIght now the market is only down about 14% from early January levels and about the same as early 2019 values which is surprisingly good considering the situation. If it drops about 50% from the highs, maybe they consider recharacterizations, but there is no relief now.
Permalink Submitted by narinder batra on Mon, 2020-04-27 19:00
Will keep an eye out for any such additional legislation in the remaining months of this year