The original conversion from a Traditional IRA to a Roth IRA must be completed within 60 days after the end of the tax year. A distribution from an IRA is taxable in the year of distribution unless it is rolled over (or converted to a Roth IRA) within 60 days. The distribution from the IRA would have to be done by December 31 of the tax year. Then, if the distribution is completed on December 31, the transfer to the Roth could be done within 60 days after the end of the year. If the transfer to the Roth fails for any reason, the distribution is taxable in the year it was distributed.
However, you can complete a recharacterization (reversal) of a Traditional IRA to Roth IRA conversion as long as the transfer is made by the due date of your return, including extensions.
Per IRS Publication 590-A Contributions to Individual Retirement Arrangements (IRAs)
, starting on page 21: Time Limit for Making a Rollover Contribution
You generally must make the rollover contribution by the 60th day after the day you receive the distribution from your traditional IRA or your employer’s plan.
For distributions made in tax years beginning after December 31, 2017, you have until the due date (including extensions) for your tax return for the tax year in which the offset occurs to roll over a qualified plan loan offset amount. A “qualified plan loan offset amount” is the amount your employer plan account balance is reduced, or offset, to repay a loan from the plan. The offset must be because either the plan terminated or you severed your employment with the employer.
The IRS may waive the 60-day requirement where the failure to do so would be against equity or good conscience, such as in the event of a casualty, disaster, or other event beyond your reasonable control. For exceptions to the 60-day period, see Ways to get a waiver of the 60-day rollover requirement
, later. Rollovers completed after the 60-day period.
In the absence of a waiver, amounts not rolled over within the 60-day period don't qualify for tax-free rollover treatment. You must treat them as a taxable distribution from either your IRA or your employer’s plan. These amounts are taxable in the year distributed, even if the 60-day period expires in the next year. You may also have to pay a 10% additional tax on early distributions as discussed under Early Distributions
in Pub. 590-B
Unless there is a waiver or an extension of the 60-day rollover period, any contribution you make to your IRA more than 60 days after the distribution is a regular contribution, not a rollover contribution. Page 29
: Converting From Any Traditional IRA Into a Roth IRA Allowable conversions.
You can withdraw all or part of the assets from a traditional IRA and reinvest them (within 60 days) in a Roth IRA. The amount that you withdraw and timely contribute (convert) to the Roth IRA is called a conversion contribution. If properly (and timely) rolled over, the 10% additional tax on early distributions won't apply. However, a part or all of the distribution from your traditional IRA may be included in gross income and subjected to ordinary income tax.
You must roll over into the Roth IRA the same property you received from the traditional IRA. You can roll over part of the withdrawal into a Roth IRA and keep the rest of it. The amount you keep will generally be taxable (except for the part that is a return of nondeductible contributions) and may be subject to the 10% additional tax on early distributions. See When Can You Withdraw or Use Assets?
, later, for more information on distributions from traditional IRAs and Early Distributions
in Pub. 590-B
for more information on the tax on early distributions. Recharacterizations
You may be able to treat a contribution made to one type of IRA as having been made to a different type of IRA. This is called recharacterizing the contribution.
To recharacterize a contribution, you generally must have the contribution transferred from the first IRA (the one to which it was made) to the second IRA in a trustee-to-trustee transfer. If the transfer is made by the due date (including extensions) for your tax return for the year during which the contribution was made, you can elect to treat the contribution as having been originally made to the second IRA instead of to the first IRA. If you recharacterize your contribution, you must do all three of the following.