Common use of Reconversion Clause in Contracts

Reconversion. Once an amount has been properly converted, any subsequent conversion of that amount is called a reconversion. Effective January 1, 2000, an ▇▇▇ owner who converts an amount from a traditional ▇▇▇ to a ▇▇▇▇ ▇▇▇ during any taxable year and then recharacterizes that amount back to a traditional ▇▇▇ may not reconvert that amount from the traditional ▇▇▇ to a ▇▇▇▇ ▇▇▇ before the later of: a. the taxable year following the taxable year in which the amount was first converted to a ▇▇▇▇ ▇▇▇; or b. the end of the 30-day period beginning on the day on which the IRA owner recharacterizes the amount from the ▇▇▇▇ ▇▇▇ back to a traditional ▇▇▇. (Regardless of whether the recharacterization occurs during the taxable year in which the amount was converted to a ▇▇▇▇ ▇▇▇ or the following taxable year.) In determining the portion of any amount held in a ▇▇▇▇ ▇▇▇ or a traditional ▇▇▇ that an ▇▇▇ owner may not reconvert, any amount previously converted (or reconverted) is adjusted for subsequent net earnings thereon. Any attempted reconversion of an amount prior to the time permitted is a failed conversion of that amount. The only remedy in this case is to recharacterize back to a traditional ▇▇▇. If the amount is not recharacterized, it is deemed a regular ▇▇▇▇ ▇▇▇ contribution, thus an excess may arise and any excess contribution is subject to the 6% excise tax to the extent that it exceeds the individual’s regular ▇▇▇▇ ▇▇▇ contribution limit. For these purposes, only a failed conversion resulting from failure to satisfy the statutory requirements for a conversion (i.e. The $100,000 MAGI limit) is treated as a conversion for determining when an ▇▇▇ owner may make a reconversion. However, if an ▇▇▇ owner inadvertently attempts to reconvert before waiting the appropriate time period, the attempted reconversion is not treated as a conversion for purposes of the reconversion rules (although it is otherwise treated as a failed conversion).