HomeRetirementIRA Recharacterization Calculator

IRA Recharacterization Calculator

Last updated 23rd Sep 2022

This IRA recharacterization calculator can be used to estimate the recharacterization amount in a given tax year. The calculator requires four inputs: the IRA starting balance, adjustments to that balance in the computation period, the amount to be recharacterized, and the IRA closing balance. Using this information, the calculator will figure out the adjusted opening balance, net income, and recharacterization amount.

Calculator Definitions

The variables used in our online calculator are defined in detail below, including how to interpret the results.

IRA Starting Balance ($)

This is the fair market value of the IRA at the beginning of the computation period, before any contributions or transfers occur into the receiving IRA.

Adjustments / Contributions to Balance ($)

The total amount of any contributions or transfers made to the IRA; including any contribution that is being recharacterized during the computation period.

Amount to Recharacterize ($)

This is the portion of any contribution that is going to be recharacterized. This could be the total of the Adjustments / Contributions to Balance or a portion of that value.

IRA Closing Balance ($)

This is the fair market value of the receiving IRA at the end of the computation period, plus the amount of any distributions or transfers (including contributions returned and recharacterizations of contributions) made from the IRA during the computation period.

Adjusted Opening Balance ($)

This is the total of the IRA Starting Balance plus Adjustments / Contributions to Balance made during the computation period.

Net Income ($)

This is the Net Income that is attributed to the portion of a contribution that is being recharacterized. The Net Income must be transferred to the second IRA along with the contribution itself.

Recharacterization Amount ($)

The Recharacterization Amount is equal to the Amount to Recharacterize plus the Net Income attributed to the portion of the contribution being recharacterized.

Disclaimer: These online calculators are made available and meant to be used as a screening tool for the investor. The accuracy of these calculations is not guaranteed nor is its applicability to your individual circumstances. You should always obtain personal advice from qualified professionals.

Moneyzine Editor

Moneyzine Editor